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iUiditiON,  COPE  6.  ttKVjHuaii, 


TEiE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


Digitized  by  tine  Internet  Arciiive 

in  2007  witii  funding  from 

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t^ije  il^onalb  l^vtii  Company 

229    Broadway,    New   York 


CORPORATE   ORGANIZATION. 

By  Thomas  Conyngton,  of  the  New  York 
Bar.  400  pp.  6x9  in.  1908.  Buckram  bind- 
ing. Prepaid  price,   $3.00 

CORPORATE  MANAGEMENT. 

By     Thomas     Conyngton.     Third     Edition. 

400    pp.    6x9    in.      1909.     Buckram    binding. 

Prepaid  price,  $3.00 

CORPORATION  LAWS  OF  ALL  STATES. 
By  M.  U.  Overland,  of  the  New  York  Bar. 
500  pp.  6x9  in.  1908-9.  Buckram  binding. 
(Including   1909   supplement.) 

Prepaid  price,  $4.00 

MAINE  CORPORATIONS. 

By  H.  M.  Heath,  of  the  Maine  Bar.  300 
pp.    6  X  9  in.     1907.     Buckram   binding. 

Prepaid  price,  $3.00 

NEW   YORK   CORPORATIONS. 

By  Richard  Harrison,  of  the  New  York 
Bar.  431  pp.  6x9  in.  1906.  Buckram 
binding.    (1909    Supplement.) 

Prepaid  price,   $3.50 

CONDITIONAL   SALES. 

By  Fred  Benson  Haring,  of  the  Buffalo 
Bar.  370  pp.  6  x  9  in.  1907.  Buckram 
binding.    (1909  Supplement.) 

Prepaid    price,    $4.00 

PARTNERSHIP    RELATIONS. 

By  Thomas  Conyngton.  221  pp.  6x9  in. 
1905.     Buckram  binding.  Prepaid  price,  $2.00 

FINANCING  AN  ENTERPRISE. 

By  Francis  Cooper.  543  pp.  SJ^  ^  8fs  in. 
1907.  Second  Edition,  2  vols.  Buckram 
binding.  Prepaid  price,   $4.00 

CORPORATE  FINANCE  AND  ACCOUNT- 
ING. 

By  H.  C.  BentlEy,  C.  P.  A.  500  pp.  6x9 
in.    1908.     Buckram   binding. 

Prepaid  price,  $4.00 

CIRCULARS   OF   any   OF   THE   ABOVE 
BOOKS   ON    APPLICATION 


A  MANUAL 


OF 


Corporate  Management 


CONTAINING 


FORMS.    DIRECTIONS,    AND    INFORMATION 

FOR  THE  USE  OF  LAWYERS  AND 

CORPORATE  OFFICIALS 


BY 

Thomas  Conyngton  of  the  New  York  Bar 

Author  of  "Corporate  Organization," 
"  Partnership  Relations,"  etc. 


THIRD  EDITION 


NEW  York 
THE  RONALD  PRESS 

1909 


nmason,  cope  &  BROBECft, 


T 
\909 


COPYKIGHT    1903 
BY 

The  Ronai,d  Press 
Copyright  1904 

BT 

The  Ronald  Press 
Copyright  1908 

BY 

The  Ronald  Press  Company 


PREFACE. 


The  purpose  of  the  present  volume  is  to  furnish  a  com- 
pact, practical  and  conveniently-arranged  work  on  cor- 
porate management  for  the  use  of  lawyers  and  corporation 
officials.  The  formation  of  corporations  is  discussed  only 
so  far  as  requisite  for  a  clear  presentation  of  the  require- 
ments and  practice  of  modern  corporate  procedure,  the 
general  subject  having  already  been  considered  in  the 
author's  companion  volume,  "Corporate  Organization." 

Any  complete  discussion  of  the  local  statutes  that 
modify  the  general  principles  of  corporation  law  in  the 
various  states  has  been  utterly  precluded  by  the  limits  of 
the  present  volume.  Therefore,  while  frequent  reference 
is  made  to  these  statutes,  they  must  in  each  state  be  con- 
sulted for  an  accurate  determination  of  local  regulations 
and  requirements.  Wherever  the  term  "statutes"  is  used 
in  the  present  volume,  reference  is  intended,  unless  other- 
wise specified,  to  the  statutes  enacted  by  the  legislatures 
of  the  various  states. 

The  forms  of  the  present  volume  have  been  increased  in 
number  until  they  now  cover  practically  the  entire  range 
of  ordinary  corporate  procedure.  The  author  believes  that 
they  will  be  found  authoritative,  convenient  and  of  con- 
tinuing value.  As  in  preceding  editions,  they  are  given  as 
precedents  and  without  the  usual  blanks  for  variable  mat- 
ter. A  better  idea  of  the  form  as  a  whole  is  thereby  con- 
veyed. Also,  the  changes  necessary  to  adapt  a  form  to 
any  special  need  are  more  readily  made  from  a  completed 

iii 


686208 


IV  PREFACE. 

instrument  than  from  one  disjointed  by  frequent  and  some- 
times puzzling  blanks. 

In  conclusion,  the  author  wishes  to  express  his  sincere 
appreciation  of  the  very  gratifying  reception  accorded  the 
preceding  editions  of  the  present  work.  He  can  hardly 
hope  for  a  more  favorable  reception  for  the  present  vol- 
ume, but  he  trusts  that  the  additions  that  have  been  made, 
both  in  text  and  forms,  and  the  changes  of  arrangement, 
have  resulted  in  a  more  valuable  work. 

Thomas  Conyngton. 
No.  20  VssEY  Street, 

New  York  City,  December  3,  1908. 


TABLE  OF  CONTENTS. 


PART   I.— THE    CORPORATE   SYSTEM. 
Chapter  I. — The   Corporation. 

I  1.  Forms  of  Business  Association. 

2.  Joint- Stock  Companies. 

3.  Corporations. 

4.  Stock  Corporations. 

5.  Stock. 

6.  Corporate  Regulation  and  Organization. 

7.  The  Statutory  Laws. 

8.  Charter  and  By-Laws. 

9.  Directors  and  Officers. 

10.  Advantages  of  Corporate  Form. 

Chapter    II.— The    Charter. 

11.  The  Charter. 

12.  Amendment  of  Charter. 

13.  Usual  Charter  Provisions. 

14.  Special  Charter  Provisions. 

15.  Incidental  Corporate  Powers. 

(1)  To  Sue  or  Be  Sued. 

(2)  To  Use  a  Seal. 

(3)  To  Buy,  Sell  and  Hold  Property. 

(4)  To  Appoint  Directors,  Officers  and  Agents. 

(5)  To  Make  By-laws. 

(6)  To  Dissolve  the  Corporation. 

(7)  To  Do  All  Things  Necessary. 

16.  Things  "Ultra  Vires." 

Chapter  III.— The  By-Laws. 

17.  Nature  of  By-laws. 

18.  Scope  of  By-laws. 

19.  Adoption  of  By-laws. 


VI  TABLE  OP  CONTENTS. 

20.  Arrangement  of  By-laws. 

21.  Usual  Provisions. 

22.  Occasional  Provisions. 

23.  Amendment  of  By-laws. 

24.  Observance  of  By-laws. 

25.  Enforcement  of  By-laws, 

26.  Record  of  By-laws. 


PART   II.— STOCK. 


Chapter  IV.— The  Stock  System. 


§  27.  Capital  Stock. 

28.  Shares  of  Stock. 

29.  Kinds  of  Stock. 

30.  Subscriptions  to  Stock. 

31.  Certificates  of  Stock. 

32.  Issuance  and  Transfer  of  Stock. 


Chapter  V.— The  Stock  Records. 


§  33.  Transfer  on  Books  of  Corporation. 

34.  Stock  Certificate  Book. 

35.  Stock  Ledger  and  Stock  Book. 

36.  Transfer  Book. 

37.  Closing  the  Books. 


Chapter  VI.— Transfer  of  Stock. 

§  3S.  Procedure  of  Transfer. 

39.  Transfer  of  Treasury  Stock. 

40.  Transfer  Agent  and  Registrar. 

41.  Lost  Certificates. 

42.  Pledges  of  Stock. 

43.  Restrictions  on  Transfers. 

Chapter  VII. — Rules  Regulating  Transfers. 

§  44.  Responsibility  of  Corporation  as  to  Transfers. 

45.  Duties  of  Officers  as  to  Transfers. 

46.  Who  May  Transfer  Stock. 

47.  To  Whom  Stock  May  be  Transferred. 

48.  Liability  Involved  in  Transfers. 

49.  Form  of  Transfer. 

50.  Transfers  to  and  by  Agents. 

51.  "  "     "     "    Executors  and  Administrators. 


TABLE  OE  CONTENTS. 

52.  Transfers  to  and  by  Trustees. 

53.  "  "     "     "    Minors. 

54.  "  "     "     "    Guardians. 

55.  "  "     "     "     Corporations. 

56.  "  "     "     "     Partnerships. 

57.  Summary  of  Rules  Regulating  Transfers. 


PART  III.— STOCKHOLDERS. 
Chapter  VHI. — Rights  and  Powers  of  Stockholders. 

(a)  Rights  of  Stockholders. 

§  58.  Incorporators,  Subscribers  and  Stockholders. 

59.  Rights  of  Stockholders. 

60.  (1)  Voting. 

61.  (2)  Dividends  and  Participation  Rights. 

62.  (3)  Distribution  of  Assets  on  Dissolution. 

63.  (4)  Inspection  of  Books. 

64.  Special  Charter  Rights. 

65.  Statutory  Rights. 

(b)  Powers  of  Stockholders. 

§  66.  Individual  and  Collective  Powers. 

67.  (1)  To  Amend  Charter. 

68.  (2)  To  Adopt,  Repeal  or  Amend  By-laws. 

69.  (3)  To  Elect  Directors. 

70.  (4)  To  Sell  Entire  Assets. 

71.  (5)  To  Dissolve  the  Corporation. 

72.  (6)  Special  Powers. 

Chapter  IX. — Liabilities  of  Stockholders. 

§  73.    Liabilities  of  Subscribers  to  Stock. 

74.  "  "    Purchasers  of  Stock. 

75.  "         of  Stockholders  as  Partners. 

76.  Assessment  Liability. 

77.  Liability  for  Disbursements  from  Capital. 

Chapter  X. — Annual  Meeting  of  Stockholders. 

§  78.    The  Annual  Meeting. 

79.  Closing  Transfer  Books. 

80.  Notice  of  Annual  Meeting. 


viii  TABIvE  OF  CONTENTS. 

81.  Preparations  for  Annual  Meeting. 

(1)  Order  of  Business. 

(2)  List  of  Stockholders. 

(3)  Outline  Minutes. 

82.  Officers  of  Meetings. 

83.  Opening  the  Meeting. 

84.  Roll-Call. 

85.  Proxies. 

86.  Quorum. 

87.  Proof  of  Notice. 

88.  Reading  of  Minutes. 

89.  Annual  Reports. 

90.  Election   of   Directors. 

91.  Voting  at  Elections. 

92.  Other  Business. 

93.  Adjournment. 

94.  Signing  Minutes. 

Chapter  XI. — Stockholders'  Special  Meetings. 

§  95.  Special  Meetings  of  Stockholders. 

%.  Call  for  Meeting. 

97.  Notice  of  Special  Meeting. 

98.  Consent  Meetings. 

99.  Opening  Formalities. 

100.  Special  Business. 

101.  Adjournment. 

PART  IV.— DIRECTORS  AND  OFFICERS. 
Chapter  XII.— The  Board  and  Its  Membership. 

§  102.  Functions  and  Action  of  the  Board. 

103.  Action  without  Meeting. 

104.  Number. 

105.  Qualifications. 

106.  Residential  Qualifications. 

107.  Stockholding  Qualifications. 

108.  Compensation  of  Directors. 

Chapter  XIII. — Election  and  Removal  of  Directors. 

§  109.  Appointment  of  Directors. 

110.  Classification  of  Directors. 

111.  Vacancies  on  the  Board. 

112.  Directors  Holding  Over. 

113.  Resignation  of  Directors. 

114.  Removal  of  Directors. 


TABLE  OF  CONTENTS.  IX 

Chapter  XIV. — Powers  and  Liabilities  of  Directors. 

§  115.  Powers  of  Directors. 

116.  Duties  of  Directors. 

117.  Appointment  and  Removal  of  Officers  and  Agents. 

118.  "  of  Committees. 

119.  Adoption  of  By-laws. 

120.  Directors  as  Officers. 

121.  Directors  Dealing  with  Corporation. 

122.  Common  Law  Liability  of  Directors. 

123.  Statutory  Liabilities  of  Directors. 

Chapter  XV. — Meetings  of  Directors. 

§  124,  Time  of  Meetings. 

125.  Place  of  Meetings. 

126.  Purposes  of  Meetings. 

127.  Assembling  Meetings. 

128.  Call  for  Special  Meetings. 

129.  Notice  of  Special  Meetings. 

130.  Call  and  Waiver  of  Notice. 

131.  Consent  Meetings. 

132.  Opening  Directors'  Meetings. 

133.  Quorum. 

134.  Reading  of  Minutes. 

135.  Reports. 

136.  Unfinished  and  New  Business. 

137.  Adjournment. 


Chapter  XVI. — Standing  Committees. 

§  138.  General. 

139.  Appointment  of  Standing  Committees. 

140.  Organization  of  Standing  Committees. 

141.  Meetings  of  the  Standing  Committees. 


Chapter  XVII.— The  Corporate  Officials. 

§  142.  Officers. 

143.  Appointment  of  Officers. 

144.  Qualifications  of  Officers. 

145.  Compensation  of  Officers. 

146.  Powers  and  Duties  of  Officers. 

147.  Liabilities  of  Officers. 

148.  De  Facto  Officers. 

149.  Removals  and  Resignations. 


X  TABIvE  OP  CONTElNTS. 

Chapter  XVIII.— The  Corporate  Officials.— (Continued.) 
§  150.    Executive  Officers. 


151. 

The  President. 

152. 

The  Vice-President. 

153. 

The  Secretary. 

154. 

The  Treasurer. 

155. 

Chairman  of  the  Board. 

156. 

Managing  Director. 

157. 

General  Manager. 

158. 

Counsel. 

159. 

Auditor. 

PART   v.— MISCELLANEOUS   CORPORATE   MATTERS. 

Chapter  XIX. — Minutes  and  Other  Corporate  Records. 
§  160.    The  Corporate  Books. 

(a)  Minutes. 

161.  The  Minute  Book. 

162.  Contents  of  Minute  Book. 

163.  Form  and  Subject  Matter  of  Minutes. 

164.  Recording  the  Proceedings. 

165.  Approval  and  Amendment  of  Minutes. 

166.  "Cut  and  Dried  Minutes." 

(b)  Other  Corporate  Records. 

167.  Subscription  and  Instalment  Books. 

168.  Dividend  Book  and  Bond  Register. 

Chapter    XX. — Dividends. 

§  169.  Declaration  of  Dividends. 

170.  Form  of  Dividends. 

171.  Payment  of  Dividends. 

172.  Illegal  Dividends. 

Chapter  XXI. — Consolidation,  Reorganization  and  Dissolution. 

§  173.    Forms  of  Consolidation. 

174.  Statutory  Consolidation. 

175.  Consolidation  by  Sale  or  Lease  of  Assets. 

176.  "  "     Purchase  of  Controlling  Interest. 

177.  Combinations. 

178.  Reorganization. 

179.  Dissolution. 


TABLE   OF   CONTENTS.  XI 

PART  VI.— FORMS  RELATING  TO  INCORPORATION. 
Chapter  XXII. — Subscription  Lists  and  Receipts. 

(a)  Subscription  Lists. 
Form. 

1.  Subscription  List.    Simple  Form. 

2.  "  Agreement.    Trustees'. 

3.  "  "  Conditional.    Stock  Bonus. 

4.  "  Blank.    Individual. 

5.  "  "  After  Organization. 

6.  Application  for  Stock.    Instalment  Payments. 

(b)  Receipts  for  Subscription  Payments. 

7.  Trustee's  Receipt. 

8.  Instalment  Scrip. 

9.  Endorsement  of  Instalment  Payments. 

10.  Instalment  Certificate. 

11.  Interim  Receipt. 

12.  Temporary  Stock  Certificate. 

(c)  Assignment   of  Subscriptions. 

13.  Assignment  of  Subscription.    No  Payments. 

14.  "  "  "  Partly  Paid. 

15.  "  "   Instalment   Receipt. 

Chapter  XXIIL— Forms  of  Stock  Certificates. 

Form. 

16.  Stock  Certificate  with  Stub.     Common  Stock. 

17.  "  "  Stub.    Common  Form. 

18.  Preferred  Stock  Certificate. 

19.  Assignment  of  Stock  Certificate.     In  Blank. 

20.  "  "       "  "  Complete. 

21.  Secretary's  Receipt  for  Stock  Certificates. 

Chapter  XXIV.— Charter  Forms. 

Form. 

22.  New  York  Charter. 

23.  New  Jersey  Charter. 

Chapter  XXV.— By-Law  Forms. 
Form. 

24.  By-laws. 

25.  Certification  of  By-laws. 


xii  TABI,E  OF  CONTENTS. 

Chapter  XXVI. — Exchange  of  Property  for  Stock. 
Form. 

26.  Proposition  to  Exchange  Property  for  Stock. 

27.  Assignment  of  Incorporators'  Subscriptions. 

28.  Stockholders'  Resolution.     Property  for  Stock. 

29.  Directors' 

30.  Assignment.     Property  for  Stock. 

31.  Instructions  for  Issuance  of  Stock. 

Charter  XXVII.— Forms  for  First  Meetings. 

(a)  Calls  and  Waivers. 
Form. 

32.  Call  and  Waiver.    Stockholders'.    Short  Form. 

33.  "     "  "  "  Extended  Form. 

34.  "     "         "  Directors'. 

(b)  Proxies. 

35.  Proxy.    First  Meeting  of  Stockholders. 

36.  Formal  Proxy.    First  Meeting  of  Stockholders. 

(c)  Minutes  of  First  Meetings. 

37.  Minutes.     Stockholders'. 
38  "  Directors'. 

PART  VII.— FORMS  RELATING  TO  MEETINGS. 

Chapter  XXVIII.— Calls  and  Waivers. 

(a)  Special  Meetings  of  Stockholders. 

Form. 

39.  Call  and  Waiver.     Special  Meeting  of  Stockholders. 

40.  President's  Call. 

41.  "  "  "  "        "  "  Formal. 

42.  Directors'  Call.     Special  Meeting  of  Stockholders. 

43.  "  Instructions.     Special  Meeting  of  Stockholders. 

44.  "  Resolution.     Special  Meeting  of  Stockholders. 

45.  Stockholders'  Request  for  Special  Meeting. 

46.  President's  Endorsement  of  Stockholders'  Request. 

47.  Stockholders'  Call  for  Special  Meeting. 

(b)  Special  Meetings  of  Directors. 

48.  Call  and  Waiver.     Special  Meeting  of  Directors. 

49.  Agreement.    Consent    Meeting    of    Directors. 

50.  President's  Call.     Special  Meeting  of  Directors. 

51.  Directors'  Call.    Special  Meeting  of  Directors. 


TABLE  OP  CONTENTS.  XIU 

Chapter  XXIX. — Forms  for  Notices  of  Meetings. 

(a)  Meetings  of  Stockholders. 
Form. 

52.  Notice.    Special  Meeting  of  Stockholders. 

53.  Publication  Notice.    Special  Meeting  of  Stockholders. 

54.  "  "  "  "        "         "         (U.  P.  R.  R.  Co.) 

55.  Notice.    Annual  Meeting. 

56.  "  "  "  (U.  S.  Steel  Corp.) 

57.  Publication  Notice.    Annual  Meeting. 

CQ  <<  ((  «  « 

59.  "  "  "  "  (U.  P.  R.  R.  Co.) 

(b)  Meetings  of  Directors. 

60.  Notice.     Special  Meeting  of  Directors. 

61.  "  Regular      " 

Chapter  XXX. — Forms  of  Proxies. 


Ponn. 

62. 

Proxy. 

Simple  Form. 

63. 

Unlimited. 

64. 

Time  Limited. 

65. 

Particular  Meeting. 

66. 

Limited  as  to  Stock. 

67. 

Annual  Meeting.    Formal. 

68. 

"              "           Prescribed  Action. 

(U.  S.  Steel  Corp.) 

69. 

Specific  Action. 

70. 

Trustee's. 

71. 

Corporate  Proxy. 

72 

" 

"           Directors'  Resolution. 

73. 

Revocation  of  Proxy. 

Chapter  XXXI.— Forms  of  Motions  and  Resolutions. 

(a)  Motions. 

Form. 

74.  Motion.    To  Receive  President's  Report. 

75.  "  Instructing  Secretary  to  Cast  Vote. 

76  "  "  "         "      "       "         Formal. 

77.  "  To  Amend  By-laws. 

78.  "  To  Pay  Bills. 

79.  "  To  Employ  General  Manager. 

80.  "  To  Appoint  an  Investigating  Committee. 

(b)  Resolutions. 

(1)  Stockholders'  Resolutions. 

81.  Resolution.    For  Sale  of  Entire  Assets. 

82.  "  Authorizing  Consolidation. 

83.  "  To  Amend  By-laws. 


xiv  TABLE  OE  CONTENTS. 

(2)  Directors'  Resolutions. 

Form. 

84.  Resolution.    To  Open  Bank  Account. 
84a.  "  Designating  Depositary. 

85.  "  "  Bank. 

86.  "  Authorizing  Issue  of  Stock. 

87.  "  "  Contract. 

88.  "  Declaring  Dividend. 

89.  "  "  "        Preferred  Stock. 

90.  "  "  "  "        and  Common  Stock. 

91.  "  Appointing  Managing  Director. 

92.  "  Calling  Special  Meeting  of  Stockholders. 

93.  "  To  Sell  Bonds. 

94.  "  To  Purchase  Property. 

95.  "  For  Settlement  of  Claim. 

96.  "  Ratifying  Sale  of  Property. 

97.  "  For  Removal  of  Officer. 

98.  "  For  Sale  of  Entire  Assets. 


Chapter  XXXII.— Incidental  Forms. 

Form. 

99.  Secretary's  List  of  Stockholders. 

100.  Outline  Minutes  for  Annual  Meeting. 

101.  Oath.     Inspectors  of  Election.    New  York. 

102.  Certificate.     Inspectors  of  Election.    New  York. 

103.  Acknowledgment  of  Inspectors'  Certificate. 

104.  Oath.    Inspectors  of  Election.     New  Jersey. 

105.  Certificate.    Inspectors  of  Election.    New  Jersey. 

106.  "  "  "         "  General. 

107.  Ballot.    Annual  Meeting. 

108.  "  "  "  Formal. 


Chapter  XXXIII. — Minutes  of  Corporate  Meetings. 

(a)  Stockholders'  Meetings. 

Form. 

109.  Annual  Meeting  of  Stockholders. 

110.  Special  Meeting  of  Stockholders. 

111.  Adjourned  Meeting  of  Stockholders. 

(b)  Directors'  Meetings. 

112.  Regular  Meeting  of  Directors. 

113.  Adjourned  Meeting  of  Directors. 

114.  Special  Meeting  of  Directors. 


TABLE  01^  CONTENTS.  : 

Chapter  XXXIV.— Annual  Reports. 

Form. 

115.  President's  Annual  Report  to  Stockholders. 

116.  Treasurer's      " 

117.  Report  of  Committee  on  By-laws. 

PART  VIII.— MISCELLANEOUS  FORMS. 
Chapter  XXXV.— Notices. 

(a)  Assessment  Notices. 
Form. 

118.  Instalment  Notice. 

119.  Notice  of  Stock  Assessment. 

120.  Assessment  Notice. 

121.  Notice.    Sale  of  Delinquent  Stock.    Statutory. 

122.  "  "     "  "  "  General. 

(b)  Notices  of  Dividends. 

123.  Dividend  Notice.    Mailing. 

124.  "  "  Publication. 

125.  Notice  Accompanying  Dividend  Check. 

126.  Dividend  Notice.     (U.  S.  Steel  Corp.) 

127.  "  "  Common  Stock. 

128.  "  "  "  and  Preferred  Stock. 

129.  "  "  Mailing  Orders  Requested. 
130a.  Mailing  Order  for  Dividends.     Face. 

130b.        "  "        "  "  Reverse. 

(c)  Notices  of  Appointment. 

131.  Notice  of  Election  as  Director. 

132.  "        "  "  "        "  Acceptance  Requested. 

133.  "        "  "  "    General  Manager. 

134.  Tender  of  Position.     Sales  Manager. 

Chapter  XXXVI. — Forms  of  Resignations. 

Form. 

135.  Resignation  of  Director. 

136.  "  "  "  Effective  on  Acceptance. 

137.  "  "  "  Peremptory. 

138.  "  "  "  Future  Date. 

139.  "  "  President.    Conditional. 

140.  "  "  Treasurer. 

Chapter  XXXVII. — Forms  of  Corporate  and  Official  Signatures. 

Form. 

141.  Official  Signature.     Informal. 

142.  "  "  Formal. 


XVI  TABIvE:  Olf  CONTEJNTS. 

143.  Corporate  Signature. 

144.  "  "  Formal. 

145.  Testimonium  Clause.    Corporate  Signature.    Seal  Attested. 

146.  "  "         Two  Corporate  Signatures. 

147.  "  "  Corporate  and  Individual  Signatures. 

148.  "  "  Signature  Affixed  by  Agent. 

Chapter  XXXVIIL— Forms  of  Checks,  Receipts  and  Notes. 

(a)  Corporate  Checks. 

Form. 

149.  Check.    Corporate  Signature. 

150.  "  Countersigned. 

151.  "  Official  Signatures. 

152.  "  "  «  Purpose  Stated. 

153.  "  Draft  Form. 

154.  Dividend  Check. 

155.  Endorsement  of  Corporate  Check. 

156.  "  "  Check  for  Deposit. 

157.  Corporate  Draft. 

(b)  Corporate  Receipts. 

158.  Corporate  Receipt. 

159.  "  "  Official   Signature. 

160.  Dividend  Receipt. 

(c)  Corporate  Notes. 

161.  Corporate  Note.    By  President. 

162.  "  "        By  Treasurer. 

163.  Collateral  Note.     On  Demand. 

164.  Corporate  Note.    Collateral  Security. 


Chapter  XXXIX. — Forms  for  Certifications. 

Form. 

165.  Certificate  to  Service  of  Notice. 

166.  Affidavit  to  Service  of  Notice. 

167.  "       "  Publication  of  Notice. 

168.  Certified  Resolution  Designating  Bank. 
168a.  Certification.    Resolution  Designating  Bank. 

169.  Certification  of  Resolution. 

170.  Certificate  of  Election  of  Treasurer. 

171.  "  "  "         "    Officers. 

172.  Certification.    Transcript  from  By-laws. 
173  "  "  "      Minutes. 

174.  "  Minutes.    President  and  Secretary. 


TABIvie  O?  CONTENTS.  XVll 

175.  Secretary's  Affidavit  to  Minutes. 

176.  Notarial  Exemplification  of  Minutes. 

177.  Treasurer's  Affidavit.    Corporate  Statement. 
177a,  "  "  Individual  Statement. 

178.  Notarial  Acknowledgment.     New  York. 

Chapter  XL. — Powers  of  Attorney,  Contracts  and  Assignments. 

(a)  Powers  of  Attorney. 

Form. 

179.  Power  of  Attorney.    To  Receive  Dividends. 

180.  "        "  "  To  Collect  Money. 

181.  "        "  "  To  Make  Delivery  of  Deed. 

182.  "        "  "  To  Manage,  Sell  and  Deed  Land. 

183.  Revocation  of  Power  of  Attorney. 

(b)  Corporate  Contracts. 

184.  Corporate  Contract. 

185.  "  Bill  of  Sale. 

(c)  Assignments. 

186.  Assignment  of  Contract. 

187.  Assent  to  Assignment  of  Contract. 

188.  Assignment  of  Contract.    Endorsement  Form. 

189.  "  "    Patent.    Individual  to  Corporation. 

Chapter  XLI. — Books  of  Record. 

(a)  Transfer  Book. 

Form. 

190.  Transfer  Book. 

191.  "  "        Condensed  Form. 

(b)  Stock  Ledger. 

192.  Stock  Book  and  Stock  Ledger. 

193.  "  "      " 

(c)  Financial  Records. 

194.  Instalment  Book. 

195.  Dividend  Book. 

Chapter  XLII. — Bonds  of  Indemnity. 

(a)  Treasurer's  Bond. 

Form. 

196.  Treasurer's  Bond.     Personal. 

(b)  Bond  for  Lost  Stock  Certificate. 

197.  Indemnity  Bond.    Lost  Stock  Certificate. 


XVin  TABI,:^  01?  CONTENTS. 

Chapter  XLIII.— The  Corporate  Calendar. 

Form. 

198.  Corporate  Calendar.    New  York. 

Chapter  XLIV.— Corporate  Bond  Issues. 

Form. 

199.  Coupon  Bond. 

200.  Coupon. 

201.  Trustee's  Certificate. 

202.  Deed  of  Trust. 


CORPORATE    MANAGEMENT 


PART  I.    THE  CORPORATE  SYSTEM. 


CHAPTER  I. 
THE  CORPORATION. 


§  I.  Forms  of  Business  Association. 

Practically  there  are  but  two  forms  of  business  asso- 
ciation,— the  partnership  and  the  stock  corporation.  A 
few  states  have  authorized  curious  organizations  of  inde- 
terminate legal  nature,  such  as  the  statutory  joint-stock 
companies  of  New  York  and  the  partnership  associations 
of  Pennsylvania  and  Michigan.  These  are,  however,  of 
doubtful  advantage  and  have  never  attained  any  extended 
use. 

§  2.  Joint-Stock  Companies. 

A  joint-stock  company  is  practically  a  partnership,  au- 
thorized by  law  to  act  under  a  corporate  name  and  to  issue 
stock  to  its  members.  This  stock  represents  the  respec- 
tive interests  of  the  members,  but  these  latter  are  liable 
for  the  debts  of  the  company  exactly  as  in  an  ordinary 
partnership.     The  arrangement  is  of  doubtful  utility.     In 

19 


20  THB  CORPORATE  SYSTEM. 

some  states  the  term  is  loosely  and  incorrectly  used  to 
designate  an  ordinary  stock  corporation. 

§  3.  Corporations. 

A  corporation  is  an  association  of  individuals  au- 
thorized by  law  to  act  as  a  whole  under  a  corporate  name 
for  some  particular  purpose  or  purposes.  It  cannot  be 
formed  as  is  a  partnership,  merely  by  the  contract  or 
agreement  of  the  parties,  but  its  organization  must  be  ex- 
pressly authorized  by  law  and  be  evidenced  by  a  charter, 
or  certificate  of  incorporation,  granted  by  the  State.  (See 
Ch.  XXIV,  "Charter  Forms.") 

Corporations  are  of  many  kinds,  designated  according 
to  their  object,  as  social,  financial,  business,  manufactur- 
ing, municipal,  transportation,  religious,  charitable,  educa- 
tional, and  the  like.  All  these  may  be  divided  into  two 
general  classes, — (i)  membership  corporations  and  (2) 
stock  corporations.  Membership  corporations,  which  in- 
clude churches,  colleges,  governments,  municipalities,  and 
societies  and  associations  for  other  than  business  purposes, 
are  the  original  form. 

§  4.  Stock  Corporations. 

Stock  corporations  are  those  in  which  the  authorized 
capital,  known  as  the  "capital  stock,"  is  divided  into  shares, 
usually  equal,  and  these  shares,  designated  as  "stock,"  rep- 
resent the  respective  interests  of  the  owners  or  "stock- 
holders" in  the  corporation. 

Stock  corporations  formed  to  carry  on  mining,  manu- 
facturing or  mercantile  enterprises,  are  sometimes  desig- 
nated as  "business"  corporations  to  distinguish  them  from 
companies  formed  for  banking  or  insurance,  which  are 
termed  "financial"  corporations,  and  from  railroad,  tele- 
graph, ferry,  and  other  so-called  "public  utilities"  corpora- 
tions.    Financial    and    public    utilities    corporations    are 


THE  CORPORATION.  21 

usually  subject  to  much  stricter  regulations  than  business 
corporations,  but  enjoy  more  extensive  powers.  The 
present  volume  treats  specifically  of  the  management  of 
business  corporations,  though  in  most  particulars  its  rules 
are  equally  applicable  to  all  other  classes  of  stock  corpora- 
tions. 

The  w^ord  "company"  is  commonly  used  to  designate  a 
corporation  and  is  so  employed  in  the  present  volume. 

§  5.  Stock. 

The  capital  of  a  stock  corporation  is  represented  by 
shares,  referred  to  as  "shares  of  stock,"  and  the  whole  of 
these  shares  makes  up  the  capital  stock. ^  The  amount  of 
this  capital  stock  is  fixed  by  the  charter  of  the  company. 
One  person  may  own  any  amount  of  stock  in  a  company, 
even  to  the  extent  of  the  entire  capital  stock. ^  (See  Part 
II,  "Stock.") 

§  6.  Corporate  Regulation  and  Organization. 

A  corporation  is  a  creature  of  the  law.  It  has  no  pow- 
ers and  no  rights  save  those  given  it  by  the  law.  To  as- 
certain the  powers,  rights  and  limitations  of  any  particular 
corporation,  reference  must  be  had  to  the  following 
sources,  given  here  in  the  order  of  their  authority:  (i) 
The  constitution  and  statutes  of  the  state  wherein  it  was 
formed  and  has  its  domicile,  and  in  which  it  is  known  as  a 
domestic  corporation;  (2)  the  charter  whereby  the  cor- 
poration was  formed;  (3)  the  by-laws,  which  are  the  legis- 
lation of  the  corporation  itself.  If  the  corporation  is 
carrying  on  its  business  in  another  state  from  that  in 
which  it  was  incorporated,  it  is  known  there  as  a  foreign 
corporation  and  the  statutes  of  this  other  state  must  be 
consulted  to  determine  its  corporate  rights  and  powers 
therein. 

1  Person,  etc.  Co.  v.  Lipps,  219  Pa.  St.,  99  (1907). 

»  Comm's  V.  Monongahela,  etc.  Co.,  216  Pa.  St  108  (1906). 


22  THE   CORPORATE  SYSTEM. 

§  7.  The  Statutory  Laws. 

The  first  corporations  were  formed  by  special  acts  of 
the  legislature  or  other  law-making  authorities,  the  char- 
ters so  granted  being  known  as  special  charters.  The 
power  to  grant  these  special  charters  resulted  in  so  much 
favoritism,  monopoly  and  other  abuse  that  it  has  been 
gradually  withdrawn  or  superseded,  and  in  this  country 
general  laws  now  exist  in  every  state,  under  which  cor- 
porations may  be  formed.  In  some  states  the  legislatures 
are  still  permitted  to  grant  special  charters,  but  in  most  of 
the  states  special  charters  for  business  corporations  have 
been  forbidden  by  constitutional  provisions  and  such  cor- 
porations may  be  formed  only  under  the  general  laws. 

In  every  state  there  is  a  more  or  less  voluminous  body 
of  legislation  relating  to  corporations.  These  laws  pre- 
vail in  their  respective  states  but  all  follow  the  same  gen- 
eral lines,  varying  only  in  details,  such  as  the  procedure 
for  obtaining  charter,  fees  charged,  notices  to  be  given  for 
annual  meetings,  reports  required,  etc.,  etc. 

§  8.  Charter  and  By-Laws. 

The  charter,  or  certificate  of  incorporation,  is  the  fund- 
amental law  of  the  corporation,  answering  to  the  constitu- 
tion of  a  state  or  nation.  From  it  are  derived  the  ex- 
istence and  all  the  powers  of  the  corporation.  (See  Ch. 
II,  "The  Charter.") 

By-laws  are  the  quasi-permanent  rules  of  corporate  ac- 
tion. They  are  usually  adopted  by  the  duly  assembled 
stockholders,  though  the  board  of  directors  has  this  power 
when  specially  authorized  thereto  by  the  charter,  or  by  the 
laws  of  the  state.     (See  Ch.  Ill,  "By-Laws.") 

§  9.  Directors  and  Officers. 

The  directors  are  elected  by  the  stockholders  at  the 
annual  meeting,  and  are  the  governing  authority  of  the 


THE  CORPORATION.  23 

corporation.  The  number  of  directors  is  commonly  pre- 
scribed in  the  charter,  and  for  convenience  is  usually  an 
odd  number,  from  three  upward.  They  have  charge  of 
the  property  and  business  of  the  company.  (See  Part 
IV,  "Directors  and  Officers.") 

The  officers  of  the  company  are  usually  elected  by  the 
directors  at  their  first  meeting  in  each  year.  The  neces- 
sary officers  of  a  corporation  are  a  president,  a  treasurer 
and  a  secretary.  These  last  two  officers  are  often  filled 
by  one  person.  In  the  larger  corporations,  vice-presi- 
dents, assistants  to  the  treasurer  and  secretary,  and  other 
officers  are  elected. 

§  ID.  Advantages  of  Corporate  Form. 

The  principal  advantages  of  the  corporate  form  are: 
(i)  Limited  Ability.  Before  any  payment  has  been 
made  on  his  subscription,  a  subscriber  to  the  stock  of  a 
corporation  is  liable  for  the  debts  of  the  company  to  the 
par  value  of  his  stock.  As  his  payments  are  made  his  lia- 
bility decreases  until,  on  payment  of  the  full  par  value,  his 
stock  becomes  "full-paid,"  and,  as  a  rule,  he  is  no  longer 
liable  for  any  debts  or  obligations  of  the  company. 
Neither  is  anyone  who  thereafter  buys  such  stock  liable, 
as  once  full-paid  it  is  always  full-paid.  This  is  the  great 
advantage  of  corporate  investment,  rendering  it  possible 
for  a  man  to  engage  in  a  corporate  enterprise  and  know 
at  all  times  exactly  how  much  he  is  risking.  In  a  partner- 
ship, on  the  contrary,  each  partner,  no  matter  how  small 
his  interest,  is  liable  for  every  firm  debt.     (See  §§  48,  73, 

74.) 

(2)  Legal  Entity.  A  corporation  is  considered  to  have 
a  distinct  entity  or  legal  existence  under  its  corporate 
name.  Hence  it  can  sue  and  be  sued  in  this  corporate 
name,  without  its  stockholders  joining  or  being  joined. 
Also  it  may  contract  with  its  members  and  bring  suit 
against  them  or  be  sued  by  them.     This  separate  legal 


24  the;  corporate  system. 

entity  is  a  great  practical  advantage  from  a  business  stand- 
point. 

(3)  Permanence.  The  system  of  stock  divided  into 
shares  gives  the  corporation  a  permanence  and  stabihty 
not  found  in  the  partnership.  The  members  of  a  corpora- 
tion may  continually  change,  v^hile  the  corporation  itself 
remains  unaffected.  No  disagreement,  disability  or  bank- 
ruptcy of  its  stockholders  need  disturb  it.  The  death  or 
insanity  of  members  does  not  destroy  it.  On  the  con- 
trary it  goes  on  forever  unless  it  voluntarily  dissolves,  be- 
comes insolvent,  or  the  period  of  existence  fixed  by  its 
charter  expires. 

(4)  Convenience  of  Stock.  A  stockholders'  interest 
in  a  corporation  is  represented  by  transferable  certificates, 
by  means  of  which  he  may  readily  sell  his  interest  in  whole 
or  in  part,  or  use  it  as  collateral  upon  which  to  borrow 
money.  In  a  partnership,  on  the  contrary,  it  is  difficult 
for  a  partner  to  sell  his  interest,  and  impossible  for  him  to 
vse  it  as  collateral.  It  is  hard  to  exaggerate  the  great 
business  convenience  of  corporate  stock  represented  by 
negotiable  certificates. 

(5)  Business  Management.  The  control  of  the  busi- 
ness of  a  corporation  by  a  board  of  directors  elected  by  the 
stockholders  and  acting  through  officers  and  agents  ap- 
pointed by  the  board  is  practical  and  most  satisfactory. 
It  secures  an  efficient,  responsible  and  representative  man- 
agement not  found  in  any  other  form  of  business  asso- 
ciation. 

(6)  Ease  of  Securing  Capital.  Because  of  the  general 
safety  and  efficiency  of  the  corporate  system,  it  is  possible 
to  induce  people  to  invest  in  the  stock  of  a  corporation 
when  they  would  not  for  a  moment  consider  an  invest- 
ment in  the  same  enterprise  conducted  as  a  partnership. 
A  mine,  a  railroad  or  an  invention  can  frequently  secure 
capital  under  the  corporate  form  when  it  would  otherwise 
be  absolutely  impossible. 


CHAPTER  II. 
THE  CHARTER. 


§  II.  The  Charter. 

A  corporation  is  created  by  a  charter  granted  by  the 
State.  This  instrument  is  also  known  as  the  certificate 
of  incorporation;  also  as  the  articles  of  association.  Le- 
gally there  is  no  difference  in  the  terms.  In  this  work, 
the  word  charter  is  usually  employed  because  it  is  the  old- 
est term  and  also  the  shortest.  The  formalities  incident 
to  securing  a  charter  are  regulated  by  statute  and  vary  in 
the  different  states. 

The  purposes  for  which  a  corporation  is  to  be  formed 
must  be  set  forth  in  the  charter  and  must  be  such  as  are 
allowed  by  the  laws  of  the  particular  state.  Ordinary 
business  corporations  are  usually  permitted  wide  latitude 
as  to  their  purposes  which  in  most  of  the  states  may  in- 
clude as  many  different  businesses  or  lines  of  activity  as 
may  be  desired.  Public  utility  and  financial  corporations, 
on  the  other  hand,  are  usually  held  rigorously  to  the  one 
purpose  and  are  hedged  about  with  many  rules  and  re- 
strictions. 

§12.  Amendment  of  Charter. 

The  charter  is  a  contract  between  the  state  and  the 
stockholders  of  the  corporation  to  which  it  is  granted,  and 
can  be  changed  only  by  agreement  of  the  parties  thereto, 
or   in   accordance   with   the   terms   under   which   it   was 

25 


26  THE  CORPORATK  SYSTEM. 

granted.  Most  of  the  States,  however,  expressly  reserve 
the  power  to  amend  corporate  charters, — a  power  which 
must  be  exercised  reasonably.^ 

A  charter  is  also  a  contract  between  the  corporation 
and  its  stockholders  and  therefore,  under  the  common  law, 
to  be  amended  only  by  unanimous  vote  of  all  the  stock- 
holders. In  most  of  the  states,  however,  the  statutes  pro- 
vide for  amendment  of  charters  by  vote  of  some  designated 
proportion  of  the  stockholders,^  These  statute  provisions 
are  effective  in  spite  of  the  contract  nature  of  the  charter, 
since  those  who  incorporate  under  such  laws,  or  who  there- 
after purchase  the  stock  of  such  corporations,  are  held  to 
have  agreed  to  the  statutory  innovation  on  the  common 
law.^ 

Under  the  procedure  obtaining  in  most  of  the  states, 
an  amendment  to  a  charter  must  be  authorized  by  the 
stockholders  and  be  approved  by  the  directors,  the  manner 
of  securing  and  indicating  such  authorization  and  approval 
being  prescribed  by  the  statutes.  The  amendment  is  then 
filed  in  the  same  manner  and  with  the  same  formalities  as 
was  the  original  charter  and  is  not  effective  until  allowed 
by  the  state  authorities.  A  fee  corresponding  to  the  or- 
ganization tax  must  also  be  paid.  No  matter  may  be  in- 
troduced by  amendment  that  would  not  have  been  allowed 
in  the  original  charter.  The  statutes  of  the  various  states 
prescribe  with  more  or  less  precision  the  scope  of  amend- 
ments, which  usually  include  changes  of  the  corporate 
name  or  purposes,  increase  or  decrease  of  stock,  change 
of  par  value  of  shares,  increase  or  decrease  of  the  number 
of  directors  and  change  of  principal  office. 

The  whole  matter  of  amendment  is  a  difficult  one,  vary- 
ing in  the  different  states  and  requiring  the  services  of  a 
competent  attorney.     (See  §  67.) 

1  N.  Y.  &  N.  -£,.  R.  R.  V.  Bristol,  151  U.  S.  556   (1894). 

*Hope,   etc.   Ins.    Co.   v.    Beckmann,   47   Mo.    93    (1870);    Marietta,   etc.    R.    R.   v. 
Elliott,  10  O.  St.  57   (1859);  Mercantile,  etc.  Co.  v.  Kneal,  51   Minn.  263   (1892). 
»  Smith  V.  Eastwood,  etc.  Co.,  58  N.  J.  Eq.  331   (1899). 


CHARTER.  27 

§  13.  Usual  Charter  Provisions. 

The  usual  specifications  of  a  charter  are  as  follows: 

(a)  The  corporate  name. 

(b)  The  purpose  or  purposes  of  the  corporation. 

(c)  The  capital  stock  with  number  and  par  value 
of  shares  specified. 

(d)  Any  classification  of  the  stock. 

(e)  Location  of  principal  office  of  the  corpora- 
tion. 

(/)  Duration  of  the  corporation. 
(g)  The  number  of  directors,  and  in  some  cases 
the  names  of  those  to  serve  for  the  first  year. 

§  14.  Special  Charter  Provisions. 

In  some  states  the  laws,  while  prescribing  certain  pro- 
visions which  must  appear  in  the  charter,  also  permit  the 
insertion  of  any  other  provisions  not  inconsistent  with  law 
which  the  incorporators  may  choose  to  insert  for  the  reg- 
ulation of  the  business  and  for  the  conduct  of  the  affairs 
of  the  corporation.  This  allows  matters  of  corporate  reg- 
ulation which  are  desired  to  be  permanent,  to  be  included 
in  the  charter  and  special  powers  or  privileges  not  usually 
available  may  also  be  secured  in  the  same  way.  Thus, 
cumulative  voting  may  be  provided  for;  stock  may  be 
classified  with  special  rights  and  privileges;  additional 
powers  may  be  given  directors,  or  their  usual  powers  may 
be  abridged;  corporate  indebtedness  may  be  limited,  or 
maximum  salaries  of  officers  may  be  prescribed. 

Charter  provisions  may  be  changed  only  by  means  of 
amendment  and  these  special  provisions  are  therefore 
given  a  permanence  that  could  not  ordinarily  be  secured 
in  any  other  way.  Most  of  the  usual  special  charter  pro- 
visions might  be  incorporated  in  the  by-laws  with  equal 
effect  but  not  with  equal  permanence,  as  the  changing  of 
the  by-laws  is  a  comparatively  simple  matter,  while  an 
amendment  of  the  charter  is  formal  and  difficult.* 

•For    full    discussion    of    special    charter   provisions,    see    Conyngton    on    Corporate 
Organization,   Ch.   XIX. 


28  THD   CORPORATE   SYSTEM. 

§  15.  Incidental  Corporate  Powers. 

In  addition  to  the  express  powers  and  privileges  con- 
ferred by  a  charter,  and  as  an  incident  of  corporate  ex- 
istence, every  corporation  has  the  following  powers, 
whether  specified  in  the  charter  or  not: 

( 1 )  To  Sue  or  Be  Sued.  A  corporation  as  a  legal  entity, 
or  artificial  person,  may  become  a  party  to  a  suit  under  its 
corporate  name.  In  this  it  differs  from  the  partnership  in 
which  every  member  must  be  made  a  party  to  litigation. 

(2)  To  Use  a  Seal.  The  use  of  the  corporate  seal  is  not 
so  highly  esteemed  as  it  was  in  former  days.  The  seal  is, 
however,  still  an  important  corporate  property,  and  is  used 
on  stock  certificates,  deeds  and  other  formal  instruments. 
(See  §153.)  It  usually  shows  the  corporate  name,  also 
the  year  and  the  state  in  which  the  company  was  incor- 
porated. These  are  customary,  but  not  essential,  as  a  seal 
with  any  other  wording  or  device,  if  properly  adopted,  is 
thereby  made  the  legal  seal  of  the  corporation.  Any  dcr 
sired  designs,  mottoes  or  ornamentation  may  appear  on 
the  seal  and  will  neither  add  to  nor  detract  from  its  legal 
effectiveness.  It  is  customary  to  prescribe  the  details  of 
the  corporate  seal  in  the  by-laws,  the  provision  being  usu- 
ally so  worded  as  to  serve  as  a  formal  adoption  of  the  de- 
scribed seal.     (See  Form  24,  Art.  VI,  §  i.) 

(3)  To  Buy,  Sell  and  Hold  Property.  This  power  is  pos- 
sessed by  all  corporations  as  far  as  may  be  necessary  to 
carry  out  the  corporate  purposes.  In  some  states  by  ex- 
press provision  the  power  is  given  more  broadly  and  to  al- 
most the  same  extent  as  possessed  by  individuals,  while  in 
other  states  it  is  narrowed,  as  in  West  Virginia,  where  the 
corporate  holdings  of  land  are  limited  to  ten  thousand 
acres,  unless  expressly  otherwise  provided  in  the  charter, 
and  in  Texas  where  real  property,  save  that  necessary  for 


CHARTER.  29 

the  corporate  purposes  must  be  alienated  within  fifteen 
years  from  the  time  of  its  acquisition. 

(4)  To  Appoint  Directors,  Officers  and  Agents.  This 
power  is  essential,  as  in  no  other  way  could  the  corporation 
act.  Directors  are  elected  by  the  stockholders.  Officers 
are  usually  elected  or  appointed  by  the  board  of  directors, 
and  other  agents  are  appointed  either  by  the  board,  or  by 
the  officers  under  instructions  from  the  board. 

(5)  To  Make  By-Lazvs.  The  charter  powers  and  limita- 
tions are  usually  expressed  in  general  terms.  To  provide 
for  the  details  of  corporate  procedure  and  to  supplement 
the  charter  provisions,  the  stockholders  pass  by-laws  reg- 
ulating the  action  of  the  directors  and  officers,  and,  gen- 
erally, the  conduct  of  the  company.  (See  Ch.  Ill,  "By- 
Laws.") 

(6)  To  Dissolve  the  Corporation.  A  corporation  has 
power  at  common  law  to  dissolve  itself  by  the  unanimous 
agreement  or  consent  of  all  its  stockholders.  In  many 
states  the  statutes  provide  that  a  corporation  may  be  dis- 
solved with  the  consent  of  a  specified  proportion  of  its 
stockholders.  To  accomplish  this  the  statutory  proceed- 
ings in  the  particular  state  must  be  closely  followed.  (See 
Ch.  XXI.) 

(7)  To  Do  All  Things  Necessary.  This  power  includes 
most  of  the  other  powers.  Having  been  given  the  right  to 
conduct  some  particular  business,  this  carries  with  it  the 
right  to  do  all  things  necessary  thereto.  For  instance,  the 
right  to  hold  real  property  is  not  usually  held  to  be  a  cor- 
porate right,  save  when  expressly  conferred,  yet,  if  it  is 
necessary  to  buy  land  for  the  purposes  of  the  corporation's 
authorized  business,  it  can  be  done.  The  general  right  to 
do  all  things  necessary  has  been  liberally  construed,  and 
today  there  are  very  few  things  possible  to  a  partnership 
or  an  individual  that  cannot  be  done  by  a  corporation. 


30  THie  corporate;  system. 

Further,  under  most  of  the  modern  codes  of  corporate  law, 
it  is  permitted  to  draw  the  charter  so  broadly  as  to  secure 
almost  any  power  that  could  possibly  be  desired. 

§  1 6.  Things  "Ultra  Vires." 

A  corporation's  powers  are  defined  by  its  charter,  and 
when  it  goes  beyond  these,  its  acts  and  contracts  are  un- 
authorized and  are  said  to  be  ''ultra  vires."  Technically 
such  contracts  are  illegal  and  the  corporation  cannot  en- 
force them  against  others,  although  they  may  sometimes 
be  enforced  against  the  corporation,  and  directors  and 
officers  may  make  themselves  personally  liable  for  involv- 
ing the  corporation  in  such  transactions.  Corporate  credi- 
tors and  stockholders  also  have  the  right  to  object  to 
ultra  vires  acts.  When,  however,  all  the  stockholders  con- 
sent and  the  corporation  has  no  creditors,  there  are  very 
few  legitimate  business  transactions  that  may  not  be  un- 
dertaken safely  by  a  private  corporation  even  though  be- 
yond the  letter  of  its  charter.'^  Also  it  may  be  said  that, 
owing  to  the  exceedingly  broad  powers  granted  in  most 
modern  charters,  the  doctrine  of  ultra  vires  is  now  of 
much  less  importance  than  formerly. 

Where  parties  contracting  with  a  corporation  have  per- 
formed their  part  of  the  contract,  the  corporation  will  not 
be  allowed  to  evade  its  obligations  by  the  plea  of  "ultra 
vires. "^ 


♦Bath  Gaslight  Co.  v.  Claffy,  151  N.  Y.  24  (1896);  Little  v.  Garabrant,  90  Hun. 
(N.  Y.)  404  (1895);  AfT'd  153  N.  Y.  661  (1897);  Fitchett  v.  Murphy,  46  App.  Div. 
(N.  Y.)   181   (1899);  Groh's  Sons  v.  Groh,  80  App.  Div.   (N.  Y.)   85   (1903). 

»  Vought  V.  Eastern  Bldg.  &  Loan  Assn.  172  N.  Y.  508  (1902);  N.  Y.  Bank  Note 
Co.  V.  Kidder,  etc.  Co.  192  Mass.  391   (1906). 


CHAPTER  III. 
THE  BY-LAWS. 


§  17.  Nature  of  By-Laws. 

By-laws  are  the  quasi-permanent  regulations  of  a  cor- 
poration as  distinguished  on  the  one  hand  from  the  more 
permanent  provisions  of  its  charter,  which  can  be  changed 
only  by  formal  statutory  procedure,  and,  on  the  other, 
from  the  less  permanent  provisions  of  motions  and  reso- 
lutions, which  usually  apply  only  to  particular  acts  or  occa- 
sions, or  to  matters  of  minor  importance,  and  may  be  read- 
ily changed. 

By-laws  are  subordinate  in  authority  to  the  constitu- 
tion and  statutes  of  the  state  in  which  the  company  is  or- 
ganized or  transacts  its  business,  and  also  to  the  charter 
of  the  company,  but  are  superior  to  motions  and  resolu- 
tions. Hence,  if  a  by-law  conflicts  with  any  of  these 
higher  authorities,  it  is  void,^  but  if  it  conflicts  with  a  mo- 
tion or  resolution,  the  by-law  prevails. 

By-laws  must  be  reasonable,  equitable  and  in  con- 
formity with  public  policy,  or  they  are  of  no  effect.^  (See 
§  68.)  Thus  a  by-law  giving  the  majority  interests  of  a 
corporation  rights  and  privileges  not  accorded  the  minor- 
ity is  illegal,  as  it  is  not  in  the  power  of  the  majority  to 
favor  themselves  or  oppress  the  minority  by  unjust  or  un- 
fair regulations.^     Nor  would  a  by-law  prohibiting  the 

*  3  Clark  &  Marshall  on  Corp.,  S  638,  and  cases  there  cited. 

'People  V.  Throop,  12  Wend.  (N.  Y.)  183  (1834);  People  v.  Medical  Society,  24 
Barb.  (N.  Y.)  570  (1857);  People's,  etc.  Bank  v.  Superior  Court,  104  Cal.  649  (1894); 
Thousand  I.  P.  Assn.  Tucker,   173  N.  Y.  203   (1903). 

•Kent  V.  Quicksilver  M.  Co.,  78  N.  Y.  159  (1879);  Ireland  v.  Globe  Milling  Co., 
21   R.  I,.   9    (1898). 

31 


32  THE   CORPORATE  SYSTEM. 

stockholders  from  parting  with  their  stock  be  effective,  as 
such  by-laws  are  held  to  be  against  public  policy. 

By-laws,  so  long  as  within  the  corporate  powers,  are 
effective  and  binding  on  both  stockholders  and  officials  of 
the  corporation.  They  are  not,  however,  effective  as  to 
third  persons  who  have  no  connection  with  the  company 
and  have  no  knowledge  of  the  by-law  provisions.  Thus, 
if  the  corporate  officials  enter  into  contracts  which  are 
apparently  within  their  own  power,  but  are  in  fact  ex- 
pressly forbidden  by  the  by-laws,  such  contracts  are  bind- 
ing on  the  corporation  if  the  other  party  is  unaware  of  the 
by-law  prohibition.  The  officials  who  have  so  wilfully  dis- 
regarded the  by-laws  are  responsible  to  the  corporation, 
but  the  corporation  cannot  repudiate  their  contracts  when 
made  under  such  conditions. 

By-laws  may  ordinarily  be  repealed  by  proper  pro- 
cedure but  occasionally  a  by-law  is  passed  as  a  considera- 
tion for  subscriptions  to  stock  or  under  other  conditions 
that  render  it  a  contract  obligation,  not  susceptible  to  re- 
peal as  are  other  by-laws.'*  Thus  as  a  condition  precedent 
to  a  large  subscription  to  stock  of  the  company,  a  by-law 
might  be  passed  insuring  to  the  minority  stockholders  cer- 
tain representation  on  the  board  of  directors.  This  by- 
law could  not  thereafter  be  repealed  against  the  objections 
of  the  parties  whose  subscriptions  were  conditioned  upon 
its  adoption.  It  has  also  been  held  that  a  by-law  provid- 
ing for  cumulative  voting  cannot  be  repeated  in  the  face  of 
objection.* 

§  1 8.  Scope  of  By-Laws. 

The  scope  and  detail  of  any  set  of  by-laws  will  depend 
upon  the  size  of  the  corporation,  the  rights  of  the  minority. 

*Kent  V.  Quicksilver  M.  Co.,  78  N.  Y.  159  (1879);  Blue  Mt.  Forest  Assn.  v. 
Borrowe,  51  Atl.  Rep.  670  (N.  H.)  (1901);  Loewenthal  v.  Rubber  Reclaiming  Co.,  52 
N.  J.   Eq.  440   (1894). 

"Blue  Mt.,  etc.  Assoc,  v.  Borrowe,  51  Atl.  Rep.  (N.  H.)  670  (1901);  Loewenthal 
V.  Rubber  Co.,  52  N.  J.  Eq.  440  (1894). 


BY-LAWS.  33 

and  the  relation  of  the  officers  and  directors  to  the  busi- 
ness. Thus  if  all  or  nearly  all  the  stock  is  owned  by  a 
few  men,  who  compose  the  board  of  directors  and  are 
themselves  officers  of  the  company  and  are  devoting  their 
entire  time  to  its  affairs,  the  by-laws  might  with  safety  be 
few  and  simple  and  general  in  their  terms.  On  the  other 
hand,  if  the  stockholders  are  numerous  and  widely  scat- 
tered, the  board  of  directors  large  and  unwieldly,  the  enter- 
prise important  and  its  actual  management  in  the  hands  of 
committees  and  officers,  the  by-laws  should  be  full,  explicit 
and  carefully  adapted  to  the  circumstances  of  the  particu- 
lar corporation.  In  brief,  the  scope  and  details  of  the  by- 
laws will  increase  as  the  size,  importance  and  liability  of 
friction  in  the  management  of  the  corporation  increase. 

§  19.  Adoption  of  By-Laws. 

The  grant  of  a  charter  confers  without  specific  men- 
tion the  power  to  make  by-laws.  This  power,  unless 
otherwise  provided  by  the  statutes  of  the  particular  state 
or  the  charter  of  the  corporation,  belongs  to  the  stock- 
holders alone. ^  These  may,  if  they  desire,  delegate  the 
power  to  the  directors. 

In  some  states  the  statutes  confer  more  or  less  ex- 
tended powers  to  make  by-laws  upon  the  directors,  the 
statute  provisions  varying  in  the  different  states.  In 
some,  as  in  New  Jersey,  North  Dakota  and  Pennsylvania, 
the  statutes  merely  provide  that  the  directors  may  be  given 
this  power  by  charter  provision  or  by  action  of  the  stock- 
holders. In  other  states,  as  in  New  York  and  Minnesota, 
they  are  given  power  to  make  by-laws  in  conformity  with 
or  subordinate  to  those  made  by  the  stockholders,  but  in 
some  few  instances,  as  in  Illinois,  Kentucky  and  the  Dis- 
trict of  Columbia,  directors  are  given  the  sole  and  entire 
right  to  make  by-laws. 

•Angel  &  Ames  on  Corp.,  §  327;  Kyd  on  Corp.,  §  98. 


34  THE   CORPORATE  SYSTEM. 

Provisions  giving  the  directors  power  to  make  or 
amend  by-laws,  save  under  careful  restrictions,  are  of 
doubtful  wisdom.  The  whole  procedure  is  an  innovation, 
altering  completely  the  original  plan  of  corporate  organi- 
zation under  which  the  by-laws  passed  by  the  stockholders 
were  designed  for  the  express  government,  regulation  and 
restraint  of  directors  and  officers.  While  the  change  may 
be  advantageous  or  even  necessary  for  the  larger  modern 
corporations,  it  is  not,  as  a  rule,  a  change  to  the  advantage 
of  the  stockholders  and  is  but  rarely,  if  ever,  advisable  for 
the  smaller  corporations. 

The  power  to  make  by-laws,  whether  vested  in  stock- 
holders or  directors,  should  be  used  with  discretion.  They 
are  the  working  rules  of  the  company  and,  if  carelessly 
drawn,  they  may,  on  the  one  hand,  seriously  impede  neces- 
sary business  operations,  or,  on  the  other  hand,  fail  to 
restrain  reckless  or  improvident  action  of  directors  and 
officers. 

By-laws  are  usually  adopted  at  the  first  meeting  of  the 
stockholders  or  of  the  directors  as  the  case  may  be,  and 
other  by-laws  are  added  as  the  necessity  arises.  They 
should  be  carefully  drawn,  formally  adopted  and  ac- 
curately recorded.  By-laws  are  usually  prepared  in  the 
first  place  by  the  counsel  of  the  company  and  are  presented 
to  the  first  meeting  of  the  stockholders,  are  read  and 
passed  upon  section  by  section,  and  are  then  adopted  as 
a  whole,  any  needed  changes  being  made  as  the  reading 
progresses.  Frequently,  however,  the  reading  is  dis- 
pensed with,  the  by-laws  being  presented  and  adopted  as  a 
whole.  The  wisdom  of  this  is  more  than  doubtful,  not 
only  because  every  interested  party  should  be  familiar 
with  the  by-law  provisions,  but  because  the  omission  of 
the  reading  gives  an  opportunity — occasionally  taken  ad- 
vantage of  by  unscrupulous  parties — to  insert  provisions 
in  the  by-laws  which  are  adverse  to  the  interests  of  the 


BY-LAWS.  35 

corporation,  but  which  are  not  discovered  until  after  adop- 
tion, when  repeal  is  difficult  or  perhaps  impossible. 

§  20.  Arrangement  of  By-Laws. 

By-laws  shoul-d  be  so  grouped  that  those  relating  to 
any  matter  may  be  readily  found.  A  good  arrangement 
is  as  follows:  (I)  Stock.  (II)  Stockholders.  (Ill)  Di- 
rectors. (IV)  Officers.  (V)  Dividends  and  Finance. 
(VI)  Sundry  Provisions.  This  arrangement  is  that 
adopted  by  Boisoit  in  his  very  excellent  work  on  by-laws, 
is  logical  and  convenient,  and  is  followed  in  the  present 
volume. 

§  21.  Usual  Provisions. 

The  usual  provisions  of  the  by-laws  relate  to  the  or- 
dinary conduct  of  the  corporate  affairs  and  provide  in  de- 
tail for  the  issuance  and  transfer  of  stock,  for  meetings 
of  stockholders  and  directors,  for  elections  of  directors  and 
officers ;  prescribe  the  powers  and  duties  of  directors  and 
officers ;  provide  for  the  general  care  and  management  of 
the  property  and  finances  of  the  corporation  and  for  the 
other  details  of  corporate  procedure. 

Provisions  which  may  or  must  appear  in  the  by-laws 
are  in  many  states  prescribed  by  statute.  Some  of  these 
are  privileges  or  regulations  which  would  otherwise  be  be- 
yond the  power  of  the  corporation.  Others  merely  reit- 
erate provisions  which  the  corporation  would  have  full 
power  to  include  without  statutory  permission.  In  any 
case,  the  recital  of  optional  or  prescribed  by-law  provisions 
in  the  statutes  does  not  prevent  the  inclusion  of  any  other 
proper  regulations  in  the  by-laws  that  may  be  desired. 

In  each  state  many  matters  directly  relating  to  cor- 
porate procedure,  such  as  notice  of  meetings,  method  of 
electing  directors,  etc.,  etc.,  are  regulated  by  statute.     It 


36  THE   CORPORATE   SYSTEM. 

is  well  to  have  the  substance  of  these  laws  embodied  in  the 
by-laws,  as  they  are  then  more  accessible  and  are  much 
less  likely  to  be  overlooked  and  disregarded  than  if  their 
observance  depended  solely  upon  the  secretary's  knowl- 
edge of  statute  law.  This  is  also  true  of  the  similar  pro- 
visions occuring  in  the  charter  of  the  company,  which 
should  always  be  incorporated  in  the  by-laws. 

§  22.  Occasional  Provisions. 

Certain  routine  matters  are  provided  for  in  every  set 
of  by-laws  as  a  matter  of  course.  In  addition,  any  other 
matters  desired  by  the  stockholders,  or  directors,  if  direc- 
tors are  empowered  to  make  by-laws,  may  be  introduced 
if  not  in  conflict  with  the  law  of  the  state  or  with  the  pro- 
visions of  the  company's  charter.  This  gives  wide  oppor- 
tunity for  the  introduction  of  provisions  to  meet  special 
conditions,  particularly  where  special  provisions  are  not 
permitted  in  the  charter.  Thus  the  by-laws  will  some- 
times prescribe  a  maximum  limit  for  salaries,  or  will  im- 
pose a  debt  limit  upon  the  corporation,  or  will  give  some 
one  officer  unusual  powers,  or,  where  permissible,  will  pro- 
vide for  cumulative  voting  or  for  classification  of  stock, 
each  class  electing  some  specified  proportion  of  the  direc- 
tors, etc.,  etc. 

The  number  of  these  occasional  or  special  provisions 
that  may  be  brought  in  the  by-laws  is  practically  un- 
limited, and  they  are  legally  effective  so  long  as  they  do 
not  transcend  the  limitations  imposed  by  equity,  or  by  the 
constitutional,  statute  or  common  law  and  the  charter  of 
the  corporation. 

§  23.  Amendment  of  By-Laws. 

Procedure  for  their  repeal  or  amendment  is  usually 
prescribed  in  the  by-laws.    When  not  otherwise  provided 


BY-tAWS.  37 

by  the  statutes,  the  charter  or  the  by-laws  themselves, 
they  may  always  be  amended  by  the  vote  of  a  majority  of 
the  stockholders  at  any  regular  meeting,  or  at  any  special 
meeting  duly  called  for  that  purpose.  Directors  have  no 
power  to  alter,  amend  or  repeal  by-laws  passed  by  the 
stockholders,  save  when  the  power  is  in  some  way  ex- 
pressly given  them. 

Under  the  usual  by-law  provisions  for  amendments,  a 
majority  of  the  outstanding  stock  constitutes  a  quorum, 
and  a  majority  of  this  quorum  may  at  any  duly  constituted 
meeting  amend  the  by-laws.  It  is  obvious  that  the  actual 
amendment  under  these  provisions  may  be  effected  by  a 
comparatively  small  proportion  of  the  outstanding  stock. 
Thus,  if  there  are  two  hundred  shares  outstanding  and 
one  hundred  and  one  shares  are  represented  at  a  meeting, 
such  meeting  is  duly  constituted,  and  fifty-one  shares,  or 
but  little  over  twenty-five  per  cent,  of  the  entire  outstand- 
ing stock,  may  then  amend  the  by-laws.  Where  greater 
stability  is  desired — generally  in  protection  of  minority 
interests — a  special  provision  is  frequently  incorporated  in 
the  by-laws  requiring  that  a  majority  of  the  entire  stock 
or  perhaps  two-thirds  in  interest,  or  even  a  larger  propor- 
tion, must  vote  in  favor  of  any  amendment  to  secure  its 
adoption. 

Such  provisions  are  entirely  legitimate  but  to  be  effec- 
tive must  usually  be  incorporated  in  the  charter.  In  some 
states  the  statutes  support  such  by-law  provisions,  even 
prescribing  the  majority  necessary  to  amend  or  repeal  by- 
laws, but  otherwise  they  are  of  little  avail.  A  majority 
of  the  stockholders  at  any  duly  constituted  meeting  have 
the  common  law  right  to  amend  and  repeal  by-laws,  and 
this  right  cannot  be  taken  from  them  by  mere  unsupported 
by-law  inhibition.^ 

A  restriction  on  this  general  right  to  amend  by-laws 

»  Smith  V.  Nelson,  18  Vt.  511    (1846). 


38  THE   CORPORATE  SYSTEM. 

is  occasionally  imposed  by  the  doctrine  of  vested  rights. 
"A  private  corporation  cannot  repeal  a  by-law  so  as  to  im- 
pair rights  which  have  been  given  and  become  vested  by 
virtue  of  the  by-law;  and  this  although  the  power  is  re- 
served by  its  charter  to  alter,  amend  or  repeal  its  by- 
laws."^ Restrictions  of  this  nature  have  already  been  re- 
ferred to  in  §  17  of  the  present  chapter. 

It  is  to  be  noted  that  in  Pennsylvania  it  has  been  de- 
cided that  the  by-laws  cannot  be  amended  in  any  impor- 
tant particular,  such  as  an  increase  of  directors,  at  an  an- 
nual meeting  unless  the  notices  of  that  meeting  informed 
all  the  stockholders  that  such  action  was  contemplated.' 
This  doctrine  is  unusual  and  does  not  obtain  in  a  majority 
of  the  states. ^° 

If  by-laws  are  to  be  amended,  it  is  desirable  that  the 
call  and  notice  for  such  meeting,  as  well  as  the  resolution 
by  which  the  change  is  made,  should  set  forth  both  the  ex- 
isting by-law  and  the  proposed  amendment.  (See  Ch. 
XXIX,  "Forms  for  Notices  of  Meetings.") 


§  24.  Observance  of  By-Laws. 

As  a  rule,  the  requirements  of  the  by-laws  should  be 
strictly  and  formally  observed.  Every  stockholder,  and, 
in  many  cases,  every  creditor  of  a  corporation,  has  the 
right  to  demand  that  its  operations  be  conducted  in  ac- 
cordance with  the  laws  of  the  state  and  with  the  pro- 
visions of  the  charter  and  by-laws  of  the  corporation. 
Hence  any  irregularities  may  lead  to  legal  interference 
and  in  some  cases  to  the  personal  liability  of  the  oflfending 
officer  or   director."     For   instance,   failure   to   give   due 

'Kent  V.  Quicksilver  Mining  Co.,  78  N.  Y.   159   (1879). 

"Bagley  v.  Reno,  etc.  201   Pa.   St.   78   (1902). 

">  Chicago,  etc.  Ry.  v.  Union  Pac.  Ry.,  47  Fed.  Rep.  15  (1891);  Warner  v. 
Mower,  11  Vt.  385   (1839). 

"  Briggs  V.  cspaulding,  141  U.  S.  132  (1890);  Bloom  v.  Nat.  Sav.  &  Loan  Co.,  152 
N.  Y.  114  (1897);  Williams  v.  McKay,  46  M.  J.  Eq.  25  (1889);  Cit.  Bldg.  Assn.  v. 
Coriell,  34  N.  J.  Eg.  383  (1881);  Stockholders  of  Shelby  R.  R.  Co.  v.  L.  C.  &  L.  R. 
R.  Co..  12  Bush  (Ky.)  62  (1876);  see  also  note  16,  §  25,  post. 


BY-LAWS.  39 

notice  of  a  special  meeting  of  the  stockholders  may  later 
cause  the  entire  proceedings  to  be  declared  invalid.^^  Or 
an  officer  acting  in  excess  of  the  authority  conferred  upon 
him  by  the  by-laws  may  render  himself  personally  liable 
for  any  resulting  loss,^^ 

When,  however,  a  corporation  is  prosperous  and  free 
from  debt,  and  there  are  no  objecting  stockholders,  and 
the  officers  possess  the  entire  confidence  of  stockholders 
and  directors,  such  accurate  and  formal  compliance  with 
all  the  by-law  requirements  is  not  so  essential.  Under 
such  circumstances  the  formal  regulations  of  the  by-laws 
may  be  waived  at  convenience  and  the  corporation  con- 
ducted with  the  same  simplicity  and  informality  as  a  part- 
nership.^'* It  must  be  emphasized,  however,  that  this  is 
irregular  and  never  safe  unless  acquiesced  in  by  every  in- 
terested party. 

If  a  stockholder  objects  to  violations  or  disregard  of 
the  by-laws,  his  objection  must  be  promptly  voiced  or 
otherwise  he  will  be  deemed  to  have  acquiesced  and  be 
estopped  from  subsequent  interference.  He  must  also  be 
prepared  to  follow  up  his  objection  with  proof  that  the 
irregularities  have  been  committed.  The  law  presumes 
that  all  proceedings  have  been  regular  and  he  who  charges 
irregularity  must  do  so  without  delay  and  must  thereafter 
prove  his  allegation. ^^ 

§  25.  Enforcement  of  By-Laws. 

The  most  potent  factor  in  securing  the  observance  of 
by-laws  is  found  in  the  legal  liabilities  and  entanglements 
that  may  result  from  violation.  As  already  stated,  cor- 
porate action  taken  in  disregard  of  by-law  requirements  is 

"Bagley  v.  Reno  Oil  Co.,  201  Pa.  St.  78  (1902);  Tuttle  v.  Michigan  A.  L.  R.  R. 
Co.,  35  Mich.  247  (1877);  Jones  v.  Railroad,  67  N.  H.  234  (1892). 

"Van  Dyck  v.  McQuade,  86  N.  Y.  38  (1881);  Scott  v.  Eagle  Fire  Co.,  7  Paige 
(N.  Y.)    198   (1838;. 

"Little  V.  Garabrant,  90  Hun   (N.  Y.)  404   (1895);  AflF'd,  153  N.  Y.  661    (1897). 

"Sargent  v.  Webster,  13  Metcalf  (Mass.)  497  (1847);  Heintzelman  v.  Druids,  etc. 
Assoc.,  38  Minn.  138  (1888). 


40  THE   CORPORATE   SYSTEM, 

frequently  illegal  and  liable  to  be  restrained  or  set  aside 
at  the  suit  of  any  stockholder  or  creditor.  Also  the  direc- 
tors and  ofHcers  guilty  of  such  irregularities  may  render 
themselves  personally  liable  for  damages. ^"^ 

Direct  penalties  for  violation  of  by-law  provisions  are 
unsatisfactory  and  very  difficult  of  enforcement,^^  and  the 
considerations  mentioned  are  generally  relied  upon  to  se- 
cure observance  of  the  by-laws  in  all  important  matters. 
The  smaller  omissions  and  negligences  on  the  part  of  di- 
rectors and  officials  are  usually  passed  over  and  disre- 
garded, or  their  recurrence  prevented  by  the  election  of 
more  careful  officials. 

Cases  may  arise  where  penalties  for  violation  of  the 
by-law  provisions  may  be  profitably  employed.  Where 
the  power  of  removal  is  given  by  the  by-laws  or  statutes, 
disregard  of  the  by-laws  by  officials  of  the  corporation 
would  undoubtedly  be  proper  grounds  for  its  exercise. 
Where  such  express  power  is  not  given,  official  disregard 
of  the  by-laws,  when  wilful,  would  probably  be  sufficient 
reason  for  removal  under  the  common  law. 

In  a  number  of  states  the  statutes  expressly  permit  the 
imposition  of  penalties  for  any  breach  of  by-law  provisions. 
These  penalties  uniformly  take  the  form  of  fines.  Thus 
in  New  Jersey,  Wisconsin,  Maine,  Michigan,  Pennsyl- 
vania, New  Mexico,  North  Carolina  and  Rhode  Island  a 
penalty  of  twenty  dollars  may  be  imposed;  in  Florida  a 
penalty  of  twenty-five  dollars,  while  in  California,  North 
Dakota,  South  Dakota,  Oklahoma  and  the  Philippines,  the 
penalty  may  be  one  hundred  dollars.  Where  the  statutes 
authorize  such  penalties,  they  may  be  enforced  by  action 
at  law  or  by  charging  the  amount  against  the  offender  and 
deducting  it  from  any  dividends  or  salary  thereafter  due 
him. 

"Matthews  et  al  v.  Assoc.  Press,  etc.,  136  N.  Y.  333  (1893);  Williams  v.  Mc- 
Kay, 46  N.  J.  Eq.  25  (1889);  Cit.  BIdg.  Assn.  v.  Coriell,  34  N.  T.  Eq.  383  (1881); 
see  also  note  11,  §  24,  ante. 

"  Monroe  Dairy  Assn.  v.  Webb,  40  App.  Div.  (N.  Y.)  49  (1899)  ;  Thomas  v.  M. 
M.  P.  Union,   121   N.  Y.  45   (1890). 


BY-LAWS.  41 

It  should  be  noted  that  no  stock  corporation  has  the 
right  to  expel  a  stockholder,  or  deprive  him  under  any 
circumstances  of  his  rights  of  membership  in  the  corpora- 
tion. Such  penalties,  if  imposed,,  could  not  be  enforced.^^ 
In  a  membership  or  non-stock  corporation  the  rule  is  dif- 
ferent.^' 

§  26.  Record  of  By-Laws. 

As  by-laws  are  adopted,  it  is  the  duty  of  the  secretary 
to  properly  record  them.  The  usual  and  preferable 
method  is  to  enter  them  in  the  minute  book  immediately 
following  the  charter.  Space  may  be  left  between  the 
different  articles  of  the  by-laws  for  the  insertion  of  any 
new  sections,  and  sufificient  space  be  left  between  the  sec- 
tions for  the  insertion  of  any  annotations  or  amendments. 

When  by-laws  are  repealed,  they  are  preferably  crossed 
out  with  red  ink,  the  date  and  any  material  circumstances 
of  their  repeal  being  endorsed  on  the  margin.  Amend- 
ments are  entered  in  the  same  way,  the  portion  of  the  by- 
law amended  being  ruled  out  and  the  amendment  inter- 
polated. New  sections  may  be  entered  in  the  same  style 
as  the  original  sections,  the  date  of  adoption  being  noted, 
but  are  sometimes  entered  in  red  ink. 

In  some  few  states,  viz..  North  and  South  Dakota, 
Idaho,  Nevada,  Montana  and  California,  the  by-laws  must 
be  entered  in  a  "Book  of  By-laws,"  and,  save  as  to  Nevada, 
must  be  properly  certified  by  the  officers  of  the  corpora- 
tion before  they  are  legally  effective.  A  still  more  formal 
certification  and  filing  is  required  in  the  Philippines. 

"  See  2  Cook  on  Corp.,  8  710. 

"Thomas  v.  M.  M.  P.  Union,  121  N.  Y.  45  (1890);  Otto  v.  Tailors  P.  &  B. 
Union,  75  Cal.  308  (1888);  People  ex  rel  Johnson  v.  N.  Y.  Produce  Ex.,  149  N.  Y. 
401    (1896). 


PART  II.— STOCK. 


CHAPTER  IV. 
THE  STOCK  SYSTEM. 


§27.     Capital  Stock. 

The  capital  stock  or  capitalization  of  a  corporation  is 
the  maximum  amount  of  stock  which  it  may  issue  under 
the  provisions  of  its  charter.  This  capitalization  is  fixed 
in  the  first  place  by  the  incorporators.  Varying  condi- 
tions influence  its  amount.  Sometimes  the  incorporators 
decide  that  a  certain  capital  is  necessary  for  the  opera- 
tions of  the  company,  and  use  this  as  a  basis  for  deter- 
mining its  capital  stock.  Or  it  may  be  estimated  that  the 
enterprise  will  pay  adequate  dividends  on  a  certain 
amount,  and  the  capitalization  be  reached  in  this  way. 
The  organization  tax  imposed  by  the  state  sometimes  in- 
fluences its  amount.  Many  other  considerations  may  enter 
in  and  the  determination  of  the  most  advantageous  capital- 
ization is  frequently  one  of  much  difficulty.^  Whatever  the 
amount  decided  upon,  it  is  stated  in  and  made  part  of  the 
charter  application,  and,  if  this  application  is  allowed,  the 
corporation  comes  into  being  with  full  authority  to  issue 
stock  up  too,  but  not  above,  the  amount  so  fixed  by  its 
charter. 

§  28.     Shares  of  Stock. 

For  the  sake  of  accuracy  and  convenience  in  repre- 

*  A  fuller  discussion  of  this  subject  will  be  found  in  Conyngton  on  Corporate 
Organization,  Ch.  VI. 

42 


THE  STOCK  SYSTEM.  43 

senting  the  interests  of  the  various  stockholders  of  the 
corporation,  its  capital  stock  is  divided  into  shares.  These 
are  almost  invariably  of  equal  value  and  together  make  up 
the  whole  capitalization.  Each  of  these  shares  ordinarily 
represents  not  only  a  unit  of  value,  but  also  a  unit  of  vot- 
ing right,  of  interest  in  the  profits  when  dividends  are  de- 
clared and  of  interest  in  the  net  assets  when  the  corpora- 
tion is  liquidated.  Those  who  invest  the  money  or  prop- 
erty with  which  the  corporation  does  business,  receive 
these  shares  in  return  for  and  as  the  evidence  of  their  in- 
vestment. Those  who  hold  shares  are  termed  stockhold- 
ers or  shareholders,  and  the  interest  of  each  is  measured 
by  the  number  of  shares  he  holds. 

The  "face"  or  "par"  value  of  shares  of  stock  is  their 
nominal  value,  as  distinguished  from  their  actual  or  selling- 
value.  This  par  value  is  usually  decided  upon  in  the  first 
place  by  the  incorporators  and  is  then  included  in  and 
fixed  by  the  charter.  In  some  few  states  this  value  is 
restricted  by  statute  within  certam  limits,  as  in  New 
York  where  shares  may  not  be  less  than  $5  nor  more  than 
$100;  Minnesota  where  they  may  not  be  less  than  $1  nor 
more  than  $100,  or  New  Hampshire  where  the  minimum 
face  value  is  $25  and  the  maximum  $500.  The  usual  and 
most  convenient  par  value  of  shares  is  $100.  They  are 
rarely  of  greater  par  value  but  are  frequently  less.  Ten 
dollar  shares  are  some  times  issued,  and  one  dollar  shares 
are  common,  particularly  in  mining  corporations.     (See 

§  5-) 

§  29.     Kinds  of  Stock. 

Unissued  Stock.  Before  issue,  the  stock  of  a  corpora- 
tion is  said  to  be  unissued.  As  a  corporation  is  empow- 
ered to  issue  stock  up  to  the  full  amount  authorized  by  its 
charter,  but  is  not  compelled  to  issue  more  of  this  than  is 
actually  necessary  for  its  operations,  it  very  frequently 


44  STOCK. 

happens  that  part  of  its  stock  is  issued  while  part  remains 
unissued.  Stock  once  issued  cannot  again  become  un- 
issued stock,  even  though  it  comes  back  into  the  posses- 
sion of  the  corporation. 

Unissued  stock,  no  matter  whether  it  be  the  whole 
capital  stock  or  only  a  portion  thereof  reserved,  represents 
nothing  whatever  beyond  the  potential  right  of  issue.  It 
has  no  intrinsic  value.  It  is  in  itself  a  nullity.  It  is  mere- 
ly the  right — granted  by  the  state — to  issue  stock  up  to 
the  prescribed  amount.  It  is  not  an  asset  of  the  corpora- 
tion any  more  than  an  unissued  promissory  note  is  an  as- 
set of  an  individual  or  firm.^ 

Unissued  stock  is  at  times  somewhat  vaguely  desig- 
nated as  "treasury  stock."  This  term  is  better  reserved 
for  stock  of  the  corporation  which  has  been  issued  but  has 
afterwards  returned  by  donation,  purchase,  or  otherwise, 
to  the  treasury  of  the  company. 

Issued  Stock.  Issued  stock  is  that  which  has,  by  duly- 
accepted  subscription,  or  by  payment  in  cash,  property  or 
services,  or  other  values,  passed  from  the  company  to 
others.  (See  §  32.)  Stock  which  has  been  issued  and  is 
in  the  hands  of  stockholders  is  said  to  be  "issued  and  out- 
standing. 

For  bookkeeping  purposes,  issued  stock  is  regarded  as 
a  liability  of  the  company,  and  the  cash  or  property  or 
other  values  received  therefor  should  be  an  equivalent 
asset. 

Full-paid  Stock.  When  the  corporation  issues  stock 
and  receives  in  exchange  therefor  not  less  than  its  full  face 
or  par  value  in  money  or  property  or  other  valuable  con- 
siderations, without  fraud  and  in  good  faith,  such  stock  is 
"full-paid."  If  issued  for  less  than  its  full  face  value  or  if 
payment  in  full  has  not  yet  been  received,  the  stock  is  not 
full-paid  stock,  and  the  holder  of  such  stock  is  liable  to  the 

'  Brewster  v.  Hartley,  37  Cal.  15  (1869). 


THE  STOCK  SYSTEM.  45 

corporation  or  its  creditors  for  the  difference  between  the 
amount  actually  paid  on  the  stock  and  its  par  value.     (See 

§§  48,  73,  74.) 

The  holders  of  full-paid  stock  are  not  liable  to  creditors 
of  the  company  in  case  of  insolvency,^  nor,  save  in  a  few 
states,  subject  to  assessment  on  their  stock. 

Common  Stock.     The  general  or  ordinary  stock  of  the 
company,  with  neither  special  privileges  nor  restrictions, 
is  termed  "common  stock."     Unless  preferred  or  other 
special  stock  is  issued  by  the  company,  all  its  stock  is  com 
mon  stock. 

Preferred  Stock.  Stock  which  by  proper  statutory  pro- 
cedure has  been  given  special  rights  as  to  dividends  or  as- 
sets or  some  other  privilege  not  enjoyed  by  the  remaining 
stock  of  the  same  corporation,  is  termed  "preferred 
stock."^     (See  Form  i8.) 

Subject  to  any  statutory  regulations,  the  privileges  of 
preferred  stock  are  purely  a  matter  of  agreement  among 
the  incorporators,  or,  if  created  later,  among  the  stock- 
holders of  the  corporation.  Preferred  stock  is  therefore 
issued  in  many  different  forms.  Thus  different  classes  of 
preferred  stock  may  be  created,  the  first  receiving  its  divi- 
dends before  the  second  and  the  second  before  the  third, 
and  so  on,  all  of  the  preferred  stocks  receiving  their  divi- 
dends in  any  year  before  the  common  stock  may  receive 
any  dividend  at  all.  Also  these  different  classes  may  re- 
ceive dividends  at  different  rates,  the  first  receiving  per- 
haps five  per  cent.,  the  second  six  per  cent.,  and  the  third 
seven  per  cent.  Or  sometimes  the  amount  of  a  preferred 
dividend  will  be  made  contingent  upon  the  amount  of  cor- 
porate profits  earned,  or  the  corporate  income  from  par- 
ticular sources  may  be  designated  for  payment  of  pre- 
ferred dividends.     Or  again  it  is  sometimes  provided  that 

•  Sprague  v.  Nat.  Bk.  of  America,  172  111.  149  (1898);  Coleman  v.  Howe,  154 
111.  458  (1895);  Berry  v.  Rood  ct  al,  168  Mo.  316  (1902). 

«  Boardman  v.  Lake  Shore  &  Mich.  So.  Ry.  Co.,  84  N.  Y.  157  (1881). 


46  STOCK. 

the  preferred  dividends  shall  first  be  paid  and  the  preferred 
stock  then  participate  equally  with  the  common  stock  of 
the  company  in  all  further  dividends  for  that  year.  Or 
the  dividends  on  preferred  stock  may  be  made  cumulative, 
in  which  case  the  stock  has  a  continuing  claim  against  the 
profits  of  the  corporation  for  its  preferred  dividends  or  any 
portion  thereof  not  paid  in  any  particular  year.  Such  de- 
ferred dividends  accumulate  from  year  to  year  and  must 
be  settled  in  full  before  any  dividend  may  be  paid  the  com- 
mon stock. 

Preferred  stock  votes  as  does  common  stock  unless  the 
privilege  is  expressly  denied.  Preferred  stock  may  or 
may  not  have  preference  in  the  final  distribution  of  assets, 
according  to  the  terms  of  the  provisions  by  which  it  is 
created.  It  may  be  stated  generally  that  preferred  stock 
has  every  right  enjoyed  by  common  stock  unless  other- 
wise expressly  provided. 

Guaranteed  Stock.  When  dividends  on  the  stock  of  one 
corporation  are  guaranteed  by  another  corporation,  the 
stock  is  said  to  be  guaranteed.  The  arrangement  is  com- 
mon among  railroad  companies  and  is  occasionally  entered 
into  by  individual  corporations.  The  term  is  also  some- 
times applied  to  preferred  stock  when  its  dividends  are 
cumulative.^ 

Treasury  Stock.  Unissued  stock  is  frequently  but  loose- 
ly designated  "treasury  stock."  As  already  stated,  the 
term  is  better  reserved  for  stock  that  has  once  been  issued 
and  has  come  back  into  the  possession  of  the  company. 
Such  stock  is  not  cancelled  but  is  held  subject  to  is_sue, 
usually  at  the  discretion  of  the  board  of  directors. 

Treasury  stock  is  regarded  as  an  asset  of  the  com- 
pany and  may  be  sold  by  the  board  of  directors  as  any 
other  property  may  be  sold.     If  it  was  "full-paid"  before 

•Green  Bay,  etc.  R.  R.  Co.  v.  Union,  etc.  Co.,  107  U.  S.  98  (1882);  Marbury 
V.  Kentucky  Union  L,and  Co.,  62  Fed.  Rep.  335  (1894);  Boardman  v.  take  Sh.  & 
M.  S.  Ry.  Co.,  84  N.  Y.  157  (1881). 


THE  STOCK  SYSTEM.  47 

it  returned  to  the  company,  it  retains  that  character  and 
may  be  sold  below  par  without  on  that  account  involving 
the  purchaser  in  any  liability.     (See  §§  48,  74.) 

While  the  company  holds  treasury  stock,  such  stock 
is  inert  and  can  neither  be  voted  nor  participate  in  divi- 
dends.^ Such  stock  is  not,  however,  cancelled  but  is  held 
subject  to  such  sale  or  other  disposition  as  the  directors 
may  determine  upon,  and  is  therefore  still  "issued"  though 
not  "outstanding."^  Its  character  as  full-paid  stock  and 
as  issued  stock  has  not  been  changed  by  its  acquisition  by 
the  corporation. 

Watered  Stock.  Stock  issued  as  full-paid  when  the  cor- 
poration has  received  no  equivalent  therefor  or  but  a  por- 
tion of  its  par  value,  is  commonly  termed  "watered"  stock.* 
Watered  stock  may  be  created  by  the  issue  of  stock  as  a 
stock  dividend  without  sufficient  increase  of  the  corporate 
property  to  support  it,  or  by  its  issuance  as  a  bonus  witH 
preferred  stock  or  bonds,  or,  as  is  the  method  in  the  great 
majority  of  cases,  by  its  issuance  for  property  or  services 
at  an  overvaluation.  In  many  states  such  issues  of  "ficti- 
tiously paid-up"  stock  are  prohibited. 

The  issuance  of  watered  stock  is  usually  objectionable. 
It  not  only  creates  a  fictitious  obligation  of  the  company 
which  may  lead  to  failure  and  insolvency,  but  it  also 
creates  a  presumption  of  values  which  do  not  exist,  an3 
which  is  not  uncommonly  carried  so  far  as  to  become  a 
fraud  upon  the  investing  public. 

§  30.     Subscriptions  to  Stock. 

Subscriptions  to  stock  are  made  both  before  and  after 
organization  of  the  corporation.  A  subscription  before 
organization  is  in  the  nature  of  a  continuing  proposition 

•Farwell  v.  Copper  Works,  8  Fed.  Rep.  66  (1881);   Brewster  v.  Hartley,  37  Cal.*/ 
IS   (1869);  O'Connor  v.  Int.  Silver  Co.,  68  N.  J.  Eq.  680   (1905). 

'  Knickerbocker,  etc.  Co.  v.  State  Board  of  Assessors,  62  Atl.  Rep.  (N.  J.)  266 
(1906);  Reversed,  74  N.  J.  L.  583   (1907);  Pabst  v.  Goodrich,  133  Wis.  43  (1907). 

•  Cook  on  Corp.,  Ch.  III.;  2  Clark  &  Marshall  on  Corp.,  §§  389-401  inclusive; 
Conyngton  on  Corp.  Organization,  88  60,  61. 


48  STOCK. 

from  the  subscriber  to  a  non-existent  corporation,  and  in 
its  usual  form  (See  Ch.  XXII,  "Subscription  Lists  and  Re- 
ceipts") is  revocable  by  the  subscriber  at  any  time  prior 
to  the  organization  of  the  corporation.  In  some  states 
the  mere  organization  of  the  corporation  is  held  to  make 
the  subscription  binding  on  the  subscriber.^  In  other 
states  it  is  not  held  to  be  binding  until  the  corporation  is 
organized  and  has  accepted  the  subscription.^"    (See  §  58.) 

A  subscription  after  organization  is  binding  on  the  sub- 
scriber as  soon  as  accepted,^^  and  the  corporation  may  usu- 
ally accept  or  reject  such  a  subscription  at  its  option.  If, 
however,  it  has  opened  subscription  books,  or  has  sent  out 
subscription  blanks,  or  has  in  some  other  way  made  a 
continuing  offer,  any  person  subscribing  thereunder  is 
held  to  accept  the  offer  of  the  corporation  and  the  contract 
is  complete  as  soon  as  the  subscription  is  made  and  both 
parties  are  then  bound.^^     (See  Forms  5,  6.) 

An  unconditional  subscription  once  legally  effective, 
constitutes  the  subscriber  a  stockholder  of  the  corporation 
and  his  subscription  cannot  be  withdrawn,  cancelled,  re- 
leased or  rejected  unless  with  the  consent  of  all  the  other 
subscribers  or  stockholders  and  creditors  of  the  corpora- 
tion. The  directors  have  no  discretion  in  the  matter.^'' 
If,  however,  a  subscriber  becomes  insolvent,  or  his  ability 
to  pay  is  doubtful,  the  directors  may  effect  any  fair  com- 
promise if  made  in  good  faith. ^'*  Also  the  corporation 
may,  when  a  subscription  is  partly  paid,  agree  to  recognize 
the  payment,  if  sufficient,  as  in  full  for  a  portion  of  the 
stock.  This  portion  then  becomes  full-paid  and  the  lia- 
bility of  unpaid  stock  attaches  only  to  the  balance. ^^     The 

'Hudson  R.  E.  Co.  v.  Tower,  156  Mass.  82  (1892);  Muncy,  etc.  Co.  v.  De  La 
Green,  143  Pa.   St.  269   (1888). 

"Yonkers  Gaz.  Co.  v.  Taylor,  30  App.  Div.  334  (1898);  Buffalo,  etc.  R.  R.  v. 
Gifford,  87  N.  Y.  294   (1882);  Athol,  etc.   Co.  v.  Carey,   116  Mass.  471    (1875). 

"Doherty  v.  Ark.  &  O.  R.  Co.,  142  Fed.  Rep.   104   (1905). 

"Greer  v.  Chartiers  Ry.,  96  Pa.  St.  391  (1880);  Spear  v.  Crawford,  14  Wend. 
20    (1835). 

"Winston  v.  Dorsett,  etc.   Co.,  129  111.  64   (1889). 

"  10   Cyc,   p.   459. 

"  1  Cook  on  Corp.,  §  168. 


THE   STOCK   SYSTEM.  49 

fact  that  the  corporation  has  become  insolvent,  or  is  un- 
successful, is  no  defense  against  payment  of  a  duly  made 
subscription.  Material  misrepresentations  are,  however, 
a  good  defense  as  are  also  any  material  changes  in  the  con- 
ditions set  out  in  the  subscription  agreement. 

In  New^  York  and  a  few  other  states  the  statutes  pro- 
vide that  subscriptions  after  organization  shall  not  be  ac- 
cepted unless  accompanied  by  payment  of  a  prescribed 
percentage.  Under  such  conditions,  a  subscription  is  ab- 
solutely ineffective  until  such  payment  has  been  made  and 
prior  thereto  may  be  withdrawn  at  the  will  of  the  maker. 
(See  Ch.  IX,  "Liabilities  of  Stockholders.") 


§  31.     Certificates  of  Stock. 

Every  stockholder  whose  stock  has  been  paid  in  full, 
is  entitled  to  a  certificate  or  certificates,  signed  by  desig- 
nated officers  and  usually  bearing  the  corporate  seal,  show- 
ing the  number  of  full-paid  shares  of  stock  owned  by  him,^^ 
In  a  number  of  states  the  issuance  of  certificates  when 
stock  is  full-paid  is  prescribed  by  statute.  In  all  cases  it 
is  advisable  that  the  by-laws  should  provide  specifically 
for  the  issuance  of  stock  certificates  and  the  manner  of 
their  execution. 

The  certificate  of  stock  is  merely  a  convenient  evidence 
of  the  ownership  of  corporate  shares.  It  occupies  much 
the  same  relation  to  stock  that  the  deed  does  to  land.  A 
stockholder  can  vote,  receive  dividends,  hold  office  and  en- 
joy all  the  rights  of  a  stockholder  before  he  receives  the 
certificate  or  after  he  has  lost  it.^''  He  is  also  liable  as  a 
stockholder  without  regard  to  whether  or  no  he  has  re- 
ceived his  certificate.^*     The  certificate  does  not  make  him 

"National  Bank  v.  Watsontown  Bank,  105  U.  S.  217  (1881);  Birmingham  Na- 
tional Bank  v.  Roden,  97  Ala.  404   (1892). 

"Wheeler  v.  Millar,  90  N.  Y.  353  (1882);  National  Bank  v.  Watsontown  Bank, 
105  U.   S.  217   (1881);  Brigham  v.  Mead,  92  Mass.  245   (1865). 

"Mitchell  V.   Beckman,  64  Gal.   117   (1883). 


50  STOCK. 

a  stockholder,  but  he  is  entitled  to  a  certificate  because  he 
is  a  stockholder.     (See  §§  32,  33,  38,  41,  58.) 

In  many  states  the  statutes  prohibit  the  issuance  of  a 
stock  certificate  before  payment  for  the  stock  has  been  re- 
ceived by  the  corporation.  Elsewhere  the  charter  or  by- 
laws should  contain  a  similar  prohibition.  The  object  in 
reserving  the  certificate  until  payment  has  been  made  is  to 
prevent  the  transfer  of  the  unpaid  stock  with  the  possible 
resulting  complications  m  the  collection  of  the  amounts 
still  due.     (See  §  48.) 

If  a  stockholder  has  paid  in  part  for  his  stock,  he  is  en- 
titled to  a  receipt  evidencing  such  payment  but  not  ordi- 
narily to  a  stock  certificate.  If,  however,  the  by-laws  so 
provide,  or  if  the  corporation  has  made  a  practice  of  is- 
suing certificates  for  partly  paid  stock  with  the  amount  of 
payments  endorsed  thereon,  he  may  demand  such  certif- 
icate as  soon  as  his  first  instalment  is  paid.^' 

Whenever  a  duly  assigned  certificate  of  stock  is  sur- 
rendered to  the  corporation,  a  new  certificate  or  certif- 
icates must  be  issued  to  the  holder  if  so  demanded.  (See 
§  44.)  If  the  right  is  likely  to  be  abused,  a  small  fee  may 
be  charged  for  each  transfer.^"  (See  §§  34,  38;  also  Ch. 
XXIII,  "Forms  of  Stock  Certificates.") 

§  32.     Issuance  and  Transfer  of  Stock. 

When  stock  of  a  corporation  is  subscribed  for  and  the 
subscriptions  are  accepted  by  the  company,  or  when  pay- 
ment for  stock  is  properly  made  in  cash,  property,  labor, 
services  or  other  values,  the  parties  making  such  subscrip- 
tions or  payments  become  stockholders  of  the  company 
entitled  to  all  the  usual  rights  of  stockholders.^^  Whether 
their  stock  is  technically  issued  then,  or  at  the  time  the 

"Birmingham  National  Bank  v.  Roden,  97  Ala.  404  (1892);  National  Bank  v. 
Watsontown  Bank,   105  U.   S.  217   (1881). 

"Giesen  v.  L,.  &  N.  Mortgage  Co.,   102  Fed.  Rep.   584   (1900). 

"Wheeler  v.  Millar,  90  N.  Y.  353  (1882);  Nelson  et  al  Ex'rs  v.  Owen,  113  Ala. 
372  (1896);  Buffalo  &  N.  Y.  City  R.  R.  Co.  v.  Dudley,  14  N.  Y.  336  (1856). 


THE  STOCK  SYSTEM.  51 

proper  entries  are  made  on  the  books  of  the  corporation, 
is  an  open  question.  It  is,  however,  definitely  decided  that 
the  issue  of  stock  is  entirely  independent  of  the  issue  of 
stock  certificates.     (See  §§  31,  33,  38,  41.) 

When  stock  is  originally  issued  it  cannot  be  considered 
a  transfer.^^  The  certificates  for  such  an  issue  are  merely 
evidence  of  value  received  by  the  corporation,  but  there  is 
no  transfer  of  anything  of  value  from  the  corporation  to 
the  individual.  The  issue  itself  is  entered  in  any  stock 
book  or  stock  ledger  kept  by  the  company  as  an  original 
issue  but  as  it  is  not  a  transfer,  is  not  entered  on  the  trans- 
fer book. 

The  directors  usually  have  power  to  determine  when 
an  issue  of  stock  is  necessary  and  to  direct  such  issue. 

Any  holder  of  full-paid  stock  is  free  to  transfer  it  at 
will.  In  the  absence  of  statutory  or  corporate  prohibition, 
stock  may  be  likewise  transferred  before  it  is  full-paid. 
This  transfer  is  usually  effected  by  the  assignment  of  the 
stock  certificates  which  represent  the  stock  transferred, 
but  if  certificates  are  not  issued,  stock  may  still  be  trans- 
ferred by  due  written  assignment  or  by  transfer  on  the 
books  of  the  corporation.  (See  Ch.  VI,  "Issue  and  Trans- 
fer of  Stock.") 


"Burr  V.  Wilcox,  22  N.  Y.  SSI    (1860). 


CHAPTER   V. 
THE  STOCK  RECORDS. 


§  33-    Transfer  on  Books  of  Corporation. 

As  a  rule,  the  issue  of  stock  is  evidenced  by  the  issue  of 
stock  certificates,  and  transfers  of  stock  are  effected  by- 
assignment  of  these  certificates.  The  due  possession  of  a 
properly  issued  stock  certificate,  or  of  such  a  stock  certif- 
icate duly  assigned,  is  therefore  sufficient  evidence  of  the 
ownership  of  stock  for  all  ordinary  business  purposes. 

For  all  corporate  purposes,  however,  stock  certificates 
are  merely  secondary  evidence  of  stock  ownership,  the 
stock  books  of  the  corporation  affording  the  highest  evi- 
dence of  title. ^  In  many  states  this  is  a  matter  of  statutory 
regulation;  elsewhere  of  charter  or  by-law  provision  (See 
§  35 )»  such  statutory  or  corporate  regulations  ordinarily 
prescribing  that  transfers  of  stock  shall  be  made  only  upon 
the  stock  books  of  the  corporation  and  that  "stockholders 
of  record,"  i.  e.,  those  whose  names  appear  upon  the  stock 
books  of  the  corporation,  are  alone  entitled  to  exercise  the 
usual  rights  of  stockholders. 

Thus  it  will  be  seen  that  while  the  duly  assigned  stock 
certificate  is  good  evidence  of  the  ownership  of  stock,  such 
ownership  is  not  effective  for  corporate  purposes  until  the 
transfer  has  been  recorded  upon  the  stock  books  of  the 
corporation.  The  holder  of  such  a  certificate  may  force 
the  proper  entries  upon  the  corporate  books  but  he  cannot 

1  Cleveland,  etc.  R.  R.  v.  Robbins,  35  O.  St.  483  (1880);  Brisbane  v.  Del.,  etc. 
R.  R.,  94  N.  Y.  204  (1883). 

52 


THE  STOCK  RECORDS.  53 

exercise  the  rights  of  a  stockholder  until  such  record  has 
been  made.     (See  §  38.) 

A  practical  application  of  this  rule  is  found  in  the 
usual  provision  that  the  transfer  books  of  the  corporation 
shall  be  closed  a  specified  number  of  days  before  elections 
or  dividend  days.  This  absolutely  prevents  any  change  of 
ownership  for  corporate  purposes  during  the  closed  period 
and  avoids  the  confusion  that  would  otherwise  exist  when 
preparing  for  payment  of  dividends,  sending  out  notices  of 
meetings  and  determining  who  is  entitled  to  vote  at  elec- 
tions. Stock  may  be  sold  without  restriction  during  this 
closed  period,  transfers  being  evidenced  by  assigned  cer- 
tificates, but  the  record  of  these  transfers  on  the  corporate 
books  cannot  be  effected  until  the  stock  books  are  again 
opened.     (See  §  37.) 

If  no  stock  certificates  were  issued,  the  interests  of  the 
stockholders  of  a  corporation  might  still  be  assigned  very 
simply,  either  by  transfer  on  the  books  of  the  corporation 
by  the  parties  in  person  in  the  presence  of  a  corporate  of- 
ficial, or  by  the  execution  of  formal  instruments  of  assign- 
ment so  attested  as  to  satisfy  the  corporate  transfer  officer 
of  their  validity.^ 

The  books  of  the  corporation  used  in  connection  with 
the  issue  and  transfer  of  stock  are  the  stock  certificate 
book,  the  stock  ledger  and  the  stock  transfer  book. 

§  34.     Stock  Certificate  Book. 

The  stock  certificate  book  consists  of  blank  stock  cer- 
tificates which,  numbered  and  in  serial  order  and  each  with 
its  corresponding  stub,  are  bound  up  in  book  form.  When 
a  certificate  is  to  be  issued  its  blanks  are  properly  filled, 
and  all  the  important  data  relating  to  its  issue  are  entered 
on  its  stub.  The  certificate  is  then  detached  from  the  stub 
for  delivery,  leaving  this  latter  in  the  stock  certificate  book 

'Manchester   Street   Railway  v.   Williams,   71   N.  H.   312    (1902);   May  v.    Mc- 

Qwillan,  129  Mich.   392   (1902). 


54  STOCK. 

as  the  secretary's  memorandum  of  the  issued  certificate. 
The  board  of  directors  have  power  to  prescribe  the  form 
of  stock  certificates  and  to  direct  their  issue.  (See  Ch. 
XXIII,  "Forms  of  Stock  Certificates.") 

The  stock  certificate  book  is  usually  prepared  at  the  ^ 
time  the  company  is  organized  or  sometimes  even  before, 
so  that  certificates  may  be  issued  as  soon  as  the  corporate 
otticials  have  been  authorized  thereto.  In  this  case  the 
form  of  stock  certificate  is  approved  and  the  issue  of  cer- 
tificates authorized  at  the  first  meeting  of  the  board.  On 
the  other  hand,  the  issue  of  permanent  certificates  is  some- 
times deferred  for  a  considerable  period  on  account  of  the 
time  required  for  their  preparation,  or  to  temporarily  save 
expense,  or  for  some  other  reason.  Under  such  circum- 
stances, temporary  receipts  or  certificates  (See  Forms  lo, 
ii)  are  issued,  exchangeable  for  the  permanent  certificates 
as  soon  as  these  latter  are  ready  for  delivery. 

When  an  issue  of  stock  is  directed,  the  secretary  fills 
out  and  seals  in  numerical  order  the  proper  certificates. 
At  the  same  time  he  enters  on  the  stub  of  each  certificate 
the  name  of  the  party  to  w^hom  it  is  to  be  issued,  the  num- 
ber of  shares  represented  by  the  certificate,  the  date  of 
issue  and,  if  it  is  an  original  issue,  that  fact  is  noted  on  the 
stub;  if  a  reissue,  the  number  of  the  certificate  surrendered 
is  entered.  The  stub  also  usually  includes  a  receipt  to 
be  signed  by  the  party  to  vv^hom  the  certificate  is  issued 
and  a  blank  in  which,  when  the  certificate  is  surrendered 
for  cancellation  and  reissue,  is  entered  the  number  of  the 
certificate  issued  in  its  stead.  The  stub  when  filled  out 
thus  contains  a  complete  record  of  its  particular  certificate. 

When  stock  is  to  be  transferred,  a  new  certificate 
should  never  be  issued  until  the  old  certificate,  properly 
endorsed,  has  been  surrendered.  This  surrendered  certif- 
icate should,  as  soon  as  received,  be  cancelled  by  cutting, 
punching  or  crossing  out  the  signatures  and  by  writing  or 


tU-B  STOCK  RECORDS.  55 

Stamping  across  the  certificate  the  word  "Cancelled." 
This  is  done  to  prevent  the  certificate  from  being  reissued 
or  from  being  used  for  fraudulent  purposes  in  case  it  were 
stolen  or  came  otherwise  into  the  hands  of  improper  par- 
ties. After  cancellation  the  certificate  is  gummed  to  the 
stub  from  which  it  was  originally  taken,  the  proper  entries 
are  made  upon  the  stub  (See  Form  13J  and,  as  far  as  the 
particular  certificate  is  concerned,  the  matter  is  closed. 
A  surrendered  certificate  should  never  be  reissued  or  again 
put  in  circulation  under  any  circumstances. 

Every  precaution  should  be  taken  to  avoid  mistakes  in 
issuing  certificates.  The  entries  on  the  stub  should  be 
made  before  the  certificate  is  separated  from  it.  Certif- 
icates with  space  for  the  name  left  blank  to  be  filled  in 
later,  should  never  be  issued.  Such  a  practice  prevents 
absolutely  the  accurate  record  of  the  stockholders  of  the 
corporation,  which  is  legally  essential.  A  corporation  is 
responsible  for  any  fraud  or  error  committed  by  its  agents 
in  the  issuance  of  stock.^ 

The  secretary  usually  has  charge  of  the  stock  certif- 
icate book  and  prepares  the  certificates  for  issue.  Where 
the  secretary  receives  no  regular  salary  or  in  cases  where 
there  are  numerous  small  transfers  of  stock,  he  is  some- 
times authorized  by  the  by-laws  or  by  resolution  of  the 
board  of  directors  to  charge  a  small  fee  for  transfers — 
usually  varying  from  ten  to  twenty-five  cents  for  each 
certificate  issued.  This  is  occasionally  a  very  convenient 
regulation,  compensating  the  secretary  for  the  time  and 
labor  involved  in  the  issue  of  new  certificates  and  also  tend- 
ing to  restrain  unnecessary  transfers."* 

In  the  smaller  corporations  the  stock  certificate  book 
is  frequently  the  only  "stock  book"  maintained.  This 
practice  is  informal  and  does  not  keep  the  record  of  stock- 
holders in  convenient  shape  for  reference,  but — in  the  ab- 

»N.  Y.  &  N.  H.  R.  R.  Co.  v.  Schuyler,  34  N.  Y.  30  (1865). 
♦Giesen  v.  London,  etc.  Mortgage  Co.,  102  Fed.  Rep.  S8^   (1900). 


56  STOCK. 

sence  of  statutes  requiring  other  stock  books  to  be  kept — 
is  not  legally  objectionable.  The  stock  certificate  book 
then  affords  the  sole  record  of  those  who  are  stockholders 
and  entitled  to  vote  and  receive  dividends.^     (See  §  36.) 

§  35.     Stock  Ledger  and  Stock  Book. 

In  almost  every  state  in  the  Union  some  form  of  stock 
record  is  prescribed  by  statute,  variously  termed  a  "stock 
book,"  "stock  ledger,"  "transfer  book"  or  "stock  and  trans- 
fer book."  In  some  states,  both  "stock  books"  and  "trans- 
fer books"  are  required.  The  intent  in  all  these  states  is 
to  preserve  an  accurate  record  of  the  stockholders  and  the 
stock  held  by  them. 

The  stock  ledger  and  the  stock  book  are  practically  and 
should  be  one  and  the  same  book,  ordinarily  kept  under 
the  title  "stock  ledger"  or  such  other  title  as  may  be  pre- 
scribed by  the  statutes.  This  stock  ledger  must  show  in 
alphabetical  order  the  names  and  addresses  of  the  stock- 
holders of  record,  the  amount  of  stock  held  and  from 
whom  and  when  this  stock  was  acquired,  and,  if  any  of 
their  stock  has  been  disposed  of,  to  whom  and  when  it  was 
transferred.  It  must  also  show  the  balance  of  stock  at  any 
time  to  the  credit  of  any  stockholder.  This  balance  gives 
the  number  of  shares  upon  which  such  stockholder  is  en- 
titled to  vote  and  draw  dividends.     (See  Forms  192,  193.) 

In  some  states  additional  data  must  be  entered.  Thus, 
in  New  York  the  amount  received  by  the  corporation  on 
any  stock  acquired  by  a  stockholder  must  be  recorded;  in 
California  and  Texas  the  corporate  assets  and  liabilities 
and  addresses  of  corporate  officers  must  be  included;  in 
North  and  South  Dakota  instalments  paid  and  unpaid,  and 
any  assessments  levied  and  paid  or  unpaid  must  be  re- 
corded; in  Alaska  all  pledges  must  be  shown  by  the  stock 

•Chemical  Nat.  Bank  v.  Colwell,  132  N.  Y.  250  (1892);  Plumb  v.  Bank  of  Enter- 
prise, 48  Kan.  484  (1892);  American  Nat.  Bank  v.  Oriental  Mills,  17  R.  I.  551 
(1891);  In  re  U.  S.,  etc.  Co.,  74  N.  J.  L.  315  (1907). 


The  stock  records.  57 

book,  and  in  Vermont  the  articles  of  association  must  ap- 
pear therein. 

The  statutes  in  many  states  are  very  peremptory  in 
regard  to  the  keeping  of  stock  books,  providing  severe 
penalties  for  failure.  Thus  in  New  York  the  statutes  not 
only  prescribe  heavy  penalties  for  failure  to  keep  stock 
books  but  provide  that  no  transfer  of  stock  shall  be  valid 
as  against  the  corporation,  its  stockholders  and  creditors — 
save  to  render  the  transferee  subject  to  liability  as  a  stock- 
holder— until  the  record  thereof  has  been  duly  entered  in 
the  stock  book.^ 

In  most  of  the  states  the  stock  book  must  be  kept  open 
for  inspection  of  stockholders  or  creditors  of  the  corpora- 
tion, and  the  provisions  relating  to  the  stock  books  apply 
both  to  domestic  corporations  and  also  to  foreign  corpora- 
tions doing  business  in  the  particular  state. 

The  stock  ledger  is  usually  posted  from  the  transfer 
book  and  its  balances  may  be  checked  from  time  to  time 
by  comparison  with  the  number  of  shares  outstanding  as 
shown  by  the  open  stubs  of  the  stock  certificate  book. 
(See  Forms  i6,  17,  192,  193.) 

§  36.     Transfer  Book. 

The  transfer  book  contains  not  only  a  record  of  trans- 
fers of  stock  of  the  particular  corporation  but  also  the  ac- 
tual instruments  of  assignment  by  which  these  transfers 
were  effected.  It  is  the  book  referred  to  by  the  usual  form 
of  stock  certificate  in  the  clause  reading  "transferable  only 
on  the  books  of  the  company,  etc."  (See  Form  16.)  In 
some  of  the  states  a  transfer  book  is  a  statutory  require- 
ment. 

The  transfer  book  is  found  in  two  general  forms.  As 
usually  kept  by  the  smaller  corporations  (See  Form  190) 
it  consists  of  a  series  of  blank  transfers  or  assignments 

•N.  Y.  stock  Corp.  Law,  S  29;  Penal  Code,  8  611. 


58  STOCK. 

bound  in  book  form.  These  are  filled  out  and  signed  by 
the  owner  of  stock  or  his  duly  authorized  attorney  when 
the  actual  transfer  of  stock  disposed  of  by  him  is  made 
upon  the  books  of  the  company.  They  are  primarily  de- 
signed to  be  formal  evidence  of  the  transfer  of  stock. 
They  are  also  the  secretary's  authority  for  the  issuance  of 
new  certificates  of  stock  to  the  assignee  in  place  of  the  old 
certificates  surrendered. 

The  second  form  of  transfer  book  (See  Form  191)  is 
used  by  the  larger  corporations  where  the  number  of  trans- 
fers is  too  great  to  permit  of  the  convenient  use  of  the 
form  already  described.  But  one  line  is  required  for  each 
transfer  of  stock,  the  transferee  or  his  duly  authorized  at- 
torney signing  in  the  right-hand  column. 

By  reference  to  the  assignment  on  the  back  of  the  stock 
certificate  (See  Forms  19  and  20),  it  will  be  seen  that  the 
assignment  of  the  transfer  book  is  practically  a  duplication 
of  that  on  the  back  of  the  stock  certificate,  save  that  the 
power  of  attorney  to  transfer  the  stock  on  the  books  of  the 
corporation  is  omitted  from  the  transfer  book.  As  the 
duly  executed  assignment  on  the  back  of  a  surrendered 
stock  certificate  is  a  full  and  sufficient  transfer  of  the  ac- 
tual ownership  of  the  stock  and  justifies  the  secretary  in 
issuing  another  certificate  in  the  name  of  the  assignee, 
many  of  the  smaller  corporations  never  keep  a  stock  trans- 
fer book,  relying  entirely  upon  the  stock  certificate  book 
with  its  stubs  and  duly  assigned  and  cancelled  certificates 
for  the  record  and  evidence  of  authorization  of  transfers. 
(See  §  34.) 

When  the  transfer  book  is  used,  its  assignment  forms 
are  signed  either  by  the  party  making  the  transfer  or  by 
his  duly  authorized  agent.  Should  the  transferrer  come  in 
person — as  he  has  the  right  to  do — and  sign  a  transfer  on 
the  stock  transfer  book,  there  is  no  legal  necessity  for  his 
signature  to  the  assignment  on  the  back  of  the  stock  cer- 


THE  STOCK  RECORDS.  59 

tificate.  It  is,  however,  always  customary  for  him  to  ex- 
ecute the  assignment  on  the  back  of  the  surrendered  stock 
certificate  as  well. 

It  is  but  seldom  that  the  transferrer  makes  the  transfer 
on  the  books  of  the  corporation  in  person.  In  perhaps 
ninety-nine  cases  out  of  a  hundred  he  merely  signs  in  blank 
the  assignment  on  the  back  of  the  certificate  and  turns  it 
over  to  the  purchaser.  The  name  of  the  attorney  to  make 
the  transfer  is  then  inserted  at  the  time  the  certificate  is 
presented  for  transfer,  either  by  the  party  by  whom  the 
certificate  is  surrendered  or  by  the  secretary  of  the  com- 
pany who,  as  a  matter  of  convenience,  usually  inserts  his 
own  name.  The  attorney  so  designated  signs  the  trans- 
fer on  the  transfer  book.     (See  §  38,) 

§37.     Closing  the  Books. 

In  all  the  larger  corporations  it  is  customary  to  close 
the  stock  books  to  transfers  prior  both  to  elections  of  di- 
rectors and  the  payment  of  dividends,''  for  a  period  of  from 
two  to  forty  days.  This  is  done  to  enable  the  corporate 
officers  to  make  an  accurate  list  of  those  entitled  to  receive 
notice  of  meetings  and  to  vote  thereat  or  to  receive  divi- 
dends.    (See  §  33.) 

In  a  number  of  states  the  statutes  expressly  authorize 
the  stock  books  to  be  so  closed  to  transfers.  Where  this  is 
not  the  case,  it  may  be  provided  for  in  the  charter  or  by- 
laws. The  precise  number  of  days  for  which  the  transfer 
books  are  closed  is  usually  fixed  by  the  by-laws.  The  reso- 
lution declaring  dividends  usually  fixes  the  number  of  days 
for  which  the  books  shall  be  closed  before  the  dividend 
day,  if  this  is  not  prescribed  by  the  by-laws. 

In  some  cases  the  statutes  or  by-laws  merely  provide 
that  stock  shall  be  voted  by  the  owner  of  record,  as  shown 
by  the  books  of  the  company,  ten,  twenty,  thirty  or  forty 

'Jones  V.  Terre  Haute,  etc.  R.  R.  Co.,  57  N.  Y.  196  (1874). 


60  STOCK. 

days  before  an  election.  This  wording  does  not  justify 
closing  the  stock  books  and  refusing  to  make  transfers. 
In  such  case  transfers  are  made  without  interruption  but 
the  secretary,  in  making  up  his  lists  of  stockholders  for  the 
election,  ignores  transfers  made  after  the  fixed  date. 

No  formality  attends  the  closing  of  the  stock  books  and 
usually  no  entry  thereof  is  made  upon  the  books,  the  secre- 
tary merely  refusing  to  transfer  certificates  presented  to 
him  for  that  purpose  during  the  prescribed  period.  The 
notice  of  the  annual  meeting  or  of  dividends  usually  sets 
forth  the  days  for  the  closing  and  reopening  of  the  trans- 
fer books. 


CHAPTER  VI. 
TRANSFER  OF  STOCK. 


§  38.     Procedure  of  Transfer. 

When  stock  is  to  be  transferred,  one  of  the  following 
courses  is  ordinarily  pursued:  (i)  The  certificate  is  as- 
signed in  blank  (See  Form  19)  and  delivered  to  the  trans- 
feree, in  which  case  the  assignment  is  absolute^  and  the 
certificate  may  then  be  passed  from  hand  to  hand  and  the 
ownership  of  the  stock  it  represents  be  thereby  transferred 
any  desired  number  of  times  without  change  of  or  addition 
to  the  assignment.  (2)  The  assignment  on  the  back  of 
the  certificate  is  completed  by  the  insertion  of  the  name  of 
the  transferee  (See  Form  20),  in  which  case  the  certificate 
must  be  surrendered  and  a  new  certificate  taken  out  by  the 
transferee  before  it  can  be  again  transferred.  (3)  The  as- 
signor completes  the  assignment  form  on  the  back  of  the 
certificate,  surrenders  the  certificate  to  the  secretary  of 
the  company,  and  secures  and  makes  delivery  of  a  new 
certificate  in  the  name  of  the  transferee. 

When  transfer  is  made  by  delivery  of  the  certificate 
with  the  name  of  the  transferee  inserted  in  the  assign- 
ment, the  transfer  is  not  made  on  the  books  of  the  cor- 
poration until  the  assigned  certificate  is  surrendered.  In 
the  meantime  the  original  owner  is  still  the  owner  of 
record  (See  §  33)  and  will  therefore  be  held  should  any 
stockholders'  liabilities  arise.  (See  §  48.)  This  objec- 
tion, when  the  stock  transferred  is  full-paid,  is  not  in  most 

>  Allen  V.  South  Boston  R.  R.,  150  Mass.  200  (1889);  Leavitt  v.  Fisher,  4  Duer 
(N.  Y.)   1   (1854);  Fraser  v.  Charleston,   11   S.   C.  486   (1878). 

61 


62  STOCK. 

states  material  in  the  case  of  ordinary  business  corpora- 
tions but  when  stock  of  banks,  trust  companies  or  other 
financial  corporations  is  transferred,  or  when  stock  is  not 
full-paid,  may  be  material  and  even  vital.     (See  §  73.) 

When  transfer  is  made  by  assignment  in  blank,  the 
certificate  so  assigned  is  semi-negotiable  and  therefore  its 
negotiation  is  comparatively  easy  in  case  the  certificate 
is  lost  or  stolen.  (See  §  41.)  Also,  as  in  the  case  of  the 
completed  assignment,  the  transfer  on  the  books  of  the 
corporation  is  not  made  until  the  transferee  surrenders 
the  assigned  certificate. 

An  objection  to  the  assignment  and  surrender  of  the 
old  certificate  by  the  transferrer  with  issue  to  him  of  a 
new  certificate  in  the  name  of  the  transferee  is  sometimes 
found  in  the  fact  that  the  proposed  sale  or  other  arrange- 
ment for  the  transfer  of  the  stock  may  fail.  The  trans- 
ferrer in  such  case  naturally  retains  the  new  certificate 
but  finds  himself  in  the  very  awkward  position  of  owning 
stock  which  stands  on  the  books  of  the  corporation  in  an- 
other's name. 

In  practice  the  assignment  in  blank,  on  account  of  its 
convenience,  is  employed  in  the  great  majority  of  stock 
transfers. 

When  the  holder  of  a  certificate  assigned  in  blank 
wishes  to  perfect  his  title  and  make  himself  a  holder  of 
record,  he  fills  in  his  own  name  as  assignee  and  surrenders 
the  certificate  to  the  secretary  or  transfer  agent  for  trans- 
fer. He  may  also,  if  he  sees  fit,  fill  in  the  name  of  the 
party  who  is  to  make  the  transfer  upon  the  books  of  the 
corporation,  though  this  is  usually  left  blank.  If  the  sig- 
nature to  the  assignment  is  genuine  and  there  are  no 
reasons  for  suspecting  any  irregularity,  the  transfer  is 
made  as  a  matter  of  course  and  a  new  certificate  is  issued 
in  the  name  of  the  assignee.  If  the  name  of  the  attorney 
to  make  the  transfer  is  left  blank  in  the  assignment  of  the 


TRANSFER  OP  STOCK.  63 

surrendered  certificate,  the  secretary  of  the  corporation 
usually  fills  in  his  own  name  and  then  completes  the  trans- 
fer, thereby  avoiding  the  delay  that  might  result  if  some 
outside  party  were  designated,  who  must  come  in  and 
sign  the  transfer  book  before  the  transfer  could  be  duly 
recorded. 

When  the  assignment  on  the  back  of  the  certificate 
has  been  completed  by  the  insertion  of  the  assignee's 
name,  the  certificate  is  not  readily  negotiable  and  is  al- 
most invariably  turned  in  and  a  new  certificate  taken  out. 
If,  however,  conditions  made  it  necessary  for  the  assignee 
to  transfer  the  certificate  originally  assigned  to  him,  he 
might  effect  the  transfer  by  means  of  a  second  assignment 
— in  blank  if  desired — written  on  the  back  of  the  cer- 
tificate, or  written  on  a  separate  sheet  and  attached  to 
the  certificate. 

As  already  stated,  stock  assigned  by  endorsement  of 
the  certificate,  whether  in  blank  or  complete,  still  stands 
on  the  books  of  the  corporation  in  the  original  owner's 
name  until  the  certificate  is  surrendered  and  the  proper 
entries  are  made  on  the  stock  books  of  the  corporation. 
Until  this  is  done  the  original  owner  is  still  the  stock- 
holder of  record  and,  while  subject  to  any  stockholders' 
liabilities  accruing  meanwhile  (See  §§  48,  73)  has,  on  the 
other  hand,  a  legal  right  to  vote  and  to  receive  payment 
of  any  dividends  declared  even  though  the  actual  sale  of 
his  stock  was  consummated  months  before.^  His  right 
to  vote  is  absolute,  and  after  its  exercise  cannot  in  any 
way  be  overturned  or  questioned.  His  right  to  dividends 
is  qualified,  as  the  dividends  belong  to  the  actual  owner 
of  the  stock,  i.  e.  the  person  possessing  the  duly  assigned 
stock  certificate,  to  whom  the  holder  of  record  must  ac- 
count.    (See  §  171.)     His  responsibility  as  to  any  stock- 

*  Brisbane  v.  Delaware,  etc.  R.  R.  Co.,  94  N.  Y.  204  (1883) ;  Cleveland,  etc.  R. 
R.  Co.  V.  Robbins,  Admr.,  35  O.  St.  483  (1880) ;  Bank  of  Commerce's  Appeal,  73  Pa. 
St.  59  (1873);  Robinson  v.  National  Bank  of  New  Berne,  95  N.  Y.  637  (1884). 


64  STOCK. 

holders'  liability  is,  as  to  the  corporation,  absolute,  but  he 
has  recourse  on  his  assignee  for  any  payments  he  may  be 
compelled  to  make  on  this  account. 

Before  delivering  the  new  certificate,  the  secretary 
should,  when  possible,  require  the  party  who  presented 
the  old  certificate  for  transfer — who  may  or  may  not  be 
the  assignee — to  sign  a  receipt  therefor  on  the  stub.  If 
the  new  certificate  is  delivered  by  mail,  it  may  be  regis- 
tered, in  which  case  the  stub  in  the  stock  certificate  book, 
the  ofifice  copy  of  the  letter  accompanying  the  certificate, 
and  the  returned  registry  receipt,  which  should  be  at- 
tached to  the  stub,  make  a  sufficient  record  of  the  transac- 
tion. Blank  receipts  are  sometimes  sent  with  the  cer- 
tificates in  such  cases,  to  be  signed  by  the  recipient  and 
returned,  and  these  receipts  when  received  by  the  secre- 
tary are  pasted  on  the  proper  certificate  stubs. 

Frequently  the  owner  of  stock  wishes  to  sell  or  trans- 
fer but  a  portion  of  the  stock  represented  by  a  certificate, 
and  in  such  case  the  assignment  on  the  back  of  the  cer- 
tificate may  be  filled  out  according  to  the  facts.  For  in- 
stance, if  Howard  Fielding  owned  one  hundred  shares  of 
stock,  all  included  in  a  single  certificate,  and  wished  to 
sell  twenty  shares  to  James  Wilton,  he  might  fill  out  the 
assignment  as  follows:  "unto  James  Wilton  twenty 
shares  and  Howard  Fielding  eighty  shares,"  or  if  the  sec- 
retary will  accept  the  somewhat  informal  assignment.  It 
might  be  merely  filled  out  "unto  James  Wilton  twenty 
shares,"  it  following  as  a  matter  of  course  that  if  but 
twenty  shares  are  assigned,  the  balance  of  the  stock  re- 
mains with  the  assignee. 

The  owner  of  the  hundred  shares  then  brings  or  sends 
in  his  certificate  to  the  secretary  and  instructs  him  to  make 
out  two  new  certificates — the  one  for  twenty  shares  in 
the  name  of  the  new  owner,  the  other  for  eighty  shares  in 
his  own  name.     The  secretary  makes  the  proper  entries 


TRANSFER  OF  STOCK.  65 

on  the  stock  book,  cancels  the  old  certificates,  issues  the 
two  new  certificates  in  accordance  with  his  instructions, 
and  delivers  both,  unless  he  has  express  instructions  from 
the  original  owner  to  the  contrary,  to  this  original  owner, 
who  then  makes  delivery  of  the  twenty-share  certificate 
at  his  convenience.  The  secretary  must  be  governed  en- 
tirely by  the  instructions  of  the  assignee  in  delivering  new 
certificates,  no  matter  in  whose  name  these  certificates 
may  be  issued,  as  they  are  still  in  fact  the  property  of  the 
original  owner. 

Another  and  usually  preferable  method  when  but  a 
portion  of  the  stock  represented  by  a  certificate  is  to  be 
transferred,  is  for  the  original  owner  to  have  the  new  cer- 
tificates issued  to  himself.  When  this  is  to  be  done,  he 
fills  in  his  own  name  as  assignee,  instructing  the  secretary 
to  issue  new  certificates  for  the  proper  number  of  shares. 
In  the  case  instanced  he  would  have  two  certificates  is- 
sued— one  for  twenty  shares  and  the  other  for  eighty 
shares — in  his  own  name.  He  would  then  assign  the 
twenty-share  certificate  in  blank,  or  in  the  name  of  the 
new  owner,  and  deliver  it,  if  the  transaction  is  concluded. 
The  new  owner  may  then  bring  in  and  surrender  this  as- 
signed certificate  and  take  out  a  new  certificate  in  his  own 
name  at  his  convenience. 

When  this  plan  is  followed,  even  should  the  sale  fail 
after  new  certificates  were  issued,  the  original  owner  still 
has  the  stock  standing  on  the  books  of  the  corporation  in 
his  own  name  and  both  certificates  made  out  to  him ; 
whereas  if  the  first  plan  had  been  followed,  one  of  the 
certificates  being  made  out  to  the  proposed  purchaser, 
part  of  his  stock  would  stand  on  the  books  in  the  trans- 
feree's name,  and  the  real  owner  must  either  secure  the 
assignment  of  this  other  party  as  a  matter  of  courtesy,  or 
otherwise  be  put  to  much  trouble  to  get  the  certificate 
back  into  his  own  name. 


66  STOCK. 

When  a  certificate  is  surrendered  for  reissue  in  one  or 
more  certificates  in  the  original  owner's  name,  the  trans- 
fer may  be  entered  on  the  transfer  book  as  a  matter  of 
record,  but  as  the  owner's  stock  account  is  not  affected 
one  way  or  the  other  by  the  transaction,  should  not  be 
posted  therefrom  to  the  stock  book.  A  memorandum  of 
the  facts  should  be  made  in  the  transfer  book  and  on  the 
stubs  of  the  certificates  involved  in  the  reissue  and  the 
certificate  numbers  in  the  stock  book  must  be  corrected. 

When  a  certificate  is  lost  and  by  due  procedure  the 
owner  has  secured  an  order  from  the  board  of  directors 
for  its  reissue,  the  secretary's  best  plan  is  to  treat  the 
transacvtion  just  as  he  would  if  the  owner. brought  in  a 
certificate  with  a  request  for  a  reissue,  save  that  he  must 
of  necessity  omit  the  usual  formality  of  the  cancellation 
of  the  old  certificate.  The  owner  should  be  required  to 
sign  the  transfer  on  the  transfer  book,  his  name  being  also 
entered  as  the  transferee,  and  the  facts  of  the  case  should 
be  noted  on  the  transfer  book  and  on  the  stubs  of  the  old 
and  new  certificates.  The  transfer  is  not,  however, 
posted  from  the  transfer  book  to  the  stock  ledger,  though 
the  changed  certificate  numbers  should  be  noted  in  this 
latter  book. 

The  secretary  or  officers  of  the  corporation  may  refuse 
a  transfer  or  reissue  of  stock  until  the  old  certificate  has 
been  surrendered  or  until  any  other  proper  requirements 
have  been  complied  with.  When,  however,  this  has  been 
done,  they  must  make  the  desired  transfer  or  reissue.^ 
The  authenticity  of  the  signature  to  an  assignment  of  a 
stock  certificate  must  be  satisfactorily  established  when 
necessary.  In  the  smaller  corporations  the  secretary  is 
usually  familiar  with  the  signatures  of  the  stockholders. 
The  larger  corporations  sometimes  require  the  signatures 
to  be  witnessed  or  guaranteed  by  some  person  known  to 

•Jones  V.   Terre   Haute,  etc.   R.   R.   Co.,   57   N.   Y.    196    (1874);   Robinson  v.   Na- 
tional Bank  of  New  Berne,  95  N.  Y.  637  (1884). 


TRANSFEJR  OF  STOCK.  67 

the  transfer  agent,  or  otherwise  that  they  shall  be  for- 
mally acknowledged  before  a  notary  public.  (See  §§44, 
45'  57-)  If  there  is  any  doubt  as  to  the  authenticity  or 
correctness  of  the  assignment  or  as  to  the  title  of  the 
party  presenting  the  certificate,  or  as  to  any  other  material 
matter,  the  secretary  has  the  right  to  delay  the  transfer 
for  a  reasonable  time  in  order  to  communicate  with  the 
former  holder  or  take  such  other  steps  as  he  may  deem 
expedient.  If  after  due  investigation,  there  still  remains 
doubt  as  to  the  propriety  of  the  transfer  or  the  owner- 
ship of  the  certificate,  or  if  there  be  conflicting  claims,  the 
secretary  may  properly  decline  to  act  until  instructed  by 
the  board  of  directors,  and  the  board,  if  in  doubt,  may 
decline  to  take  action  in  the  matter  until  ordered  thereto 
by  some  court  of  competent  jurisdiction.     (See  §  41.) 

§  39.     Transfer  of  Treasury  Stock. 

When  treasury  stock  is  donated  to  or  otherwise  ac- 
quired by  a  corporation,"*  the  assignment  may  run  to  the 
corporation  direct,  as  "John  Marshall  Company,"  to  its 
treasurer,  as  "Treasurer  of  John  Marshall  Company,"  or 
to  a  trustee,  as  "John  H.  McGowan,  Trustee  for  John 
Marshall  Company."  The  certificates  so  assigned  are 
cancelled  when  received  and  the  proper  entries  are  made 
on  the  transfer  book  and  stock  ledger.  When  such  stock 
is  held  in  the  name  of  the  company  or  even  by  the  treas- 
urer of  the  company,  no  new  certificates  need  be  issued 
until  the  stock  is  sold,  the  fact  that  certificates  are  not 
issued  being  noted  on  the  stock  books.  When  a  sale  of 
such  stock  is  made,  the  new  certificates  are  made  out  di- 
rect to  the  purchaser.  Certificates  might  properly  be  is- 
sued meanwhile  in  the  name  of  the  company  or  to  the 
treasurer  if  desired,  but  such  issue  is  unnecessary  as  the 
data  of  the  transfer  book,  the  entry  on  the  stock  ledger 

*  See  Conyngton  on  Corp.  Organization,  Ch.  X. 


68  STOCK. 

and  the  cancelled  certificates  are  quite  sufficient  to  evi- 
dence the  transaction.  It  is  obvious  that  the  reasons  that 
make  the  certificate  desirable  when  stock  is  held  by  an 
individual,  do  not  apply  when  a  corporation  holds  its  own 
stock. 

When  treasury  stock  is  sold,  the  secretary  is  authorized 
by  due  resolution  of  the  board  of  directors  to  issue  the 
proper  certificates.  Such  transfers  are  entered  on  the 
stock  books  of  the  corporation  as  in  case  of  any  other 
transfer  of  stock.  If  certificates  are  not  issued  for  the 
stock  while  held  by  the  corporation,  this  fact  should  be 
noted  on  the  stock  books. 

§  40.     Transfer  Agent  and  Registrar. 

A  transfer  agent  in  the  modern  acceptation  of  the 
term,  is  one  who  supervises  and  certifies  transfers  of  cor- 
porate stock.  The  extent  of  his  supervision  depends  upon 
custom  or  upon  the  particular  agreement. 

A  transfer  agent  usually  keeps  the  stock  certificate 
book  in  his  custody.  When  a  transfer  is  to  be  made,  the 
certificate  of  stock  duly  assigned  is  surrendered  to  the 
transfer  agent,  who  thereupon  cancels  the  surrendered 
certificate,  attaches  it  to  its  proper  stub  and  issues  a  new 
certificate  in  the  name  of  the  transferee.  This  certificate 
is  then  sent  to  the  proper  corporate  officials  who  affix 
their  signatures  and  the  corporate  seal — unless  the  seal  is 
also  entrusted  to  the  transfer  agent — make  the  proper 
records  in  the  transfer  and  stock  books  and  return  the 
signed,  or  signed  and  sealed  certificate  to  the  transfer 
agent.  The  transfer  agent  thereupon  seals  the  certificate 
if  not  already  sealed,  endorses  it  in  evidence  of  its  due 
issue,  delivers  it  to  the  transferee,  and  the  transaction  is 
closed. 

Occasionally  when  a  transfer  agent  is  employed,  the 
stock  certificate  book  is  retained  in  the  custody  of  the 


l^RANSI^ER  O?  STOCK.  69 

corporation.  In  such  case  when  a  certificate  is  presented 
for  transfer,  it  is  cancelled  by  the  transfer  agent  and 
turned  over  to  the  corporation  in  exchange  for  a  new  cer- 
tificate issued  in  the  name  of  the  transferee.  This  cer- 
tificate is  endorsed  by  the  transfer  agent  and  delivered  to 
its  owner.  When  the  stock  certificate  book  is  kept  by  the 
corporation,  the  transfer  agent  keeps  an  independent 
record  of  stock  certificates  issued  and  surrendered,  in 
order  that  the  regularity  of  any  particular  transfer  or  is- 
sue may  be  readily  and  definitely  ascertamed. 

A  registrar  is  a  corporate  appointee  who  also  super- 
vises the  transfer  of  corporate  stock  but  does  not  usually 
carry  his  supervision  to  the  same  extent  as  does  the  trans- 
fer agent,  his  function  being  merely  to  register  stock  as 
issued.  He  maintains  a  record  of  all  stock  certificates  is- 
sued and  of  the  surrender  and  reissue  of  any  new  cer- 
tificates with  the  names  of  the  parties  to  the  transfer. 
If  an  issue  or  transfer  is  to  be  made,  the  registrar  passes 
upon  the  certificates  and  countersigns  them  if  they  are 
correctly  issued. 

It  will  be  seen  that  the  duties  of  the  transfer  agent  and 
registrar  are  distinct,  and  should  not  be  performed  by  a 
single  person  or  institution.  The  function  of  the  trans- 
fer agent  is  to  ensure  the  proper  issue  of  stock.  The 
function  of  the  registrar  is  to  ensure  the  regularity  of  is- 
sue and  to  prevent  overissues.  The  functions  of  the  two 
somewhat  overlap,  as  the  transfer  agent  would  not  per- 
mit an  overissue  of  stock  nor  would  the  registrar  sign 
stock  improperly  issued. 

It  is  obvious  that  the  work  of  a  transfer  agent  and 
registrar  to  be  effective  must  be  discharged  by  persons  or 
institutions  of  the  highest  character  and  unquestioned 
standing.  For  this  reason  trust  companies  are  usually 
appointed. 

Speaking  generally,  the  employment  of  transfer  agents 


70  STOCK. 

and  registrars  is  advisable  whenever  transfers  of  stock  are 
likely  to  be  numerous.  The  procedure  involved  is  simple 
in  theory  but  in  practice  involves  much  detailed  work. 
Also  it  is  usually  desirable  that  transfers  be  effected 
rapidly  and  accurately.  The  employment  of  the  proper 
transfer  agent  and  registrar,  or  transfer  agent  alone,  re- 
lieves the  corporate  officials  from  the  detailed  work  and 
responsibility  involved,  reduces  the  possibility  of  fraud  or 
error  in  the  issuance  of  stock  to  a  minimum,  and  affords 
a  general  safety  and  convenience  not  otherwise  secured. 
Stock  exchanges  require  that  the  securities  listed  by  them 
shall  be  issued  through  suitable  transfer  agents  and  regis- 
trars. 

§  41.     Lost  Certificates. 

A  stockholder,  so  shown  by  the  books  of  his  company, 
is  entitled  to  every  right  and  privilege  of  a  stockholder 
without  regard  to  the  whereabouts  of  his  certificate.^ 

When  certificates  are  lost,  the  owner  usually  desires  to 
have  new  certificates  issued,  not  in  order  to  secure  any 
corporate  rights  but  merely  to  have  his  interest  in  such 
shape  that  he  may  readily  sell,  pledge,  or  otherwise  use 
his  stock.  Stockholders  have  a  general  right  to  certif- 
icates^ and,  if  their  certificates  are  lost,  to  have  them  re- 
placed, but,  before  it  reissues  any  such  certificates,  the 
corporation  on  its  part  has  the  right  to  require  reasonable 
safeguards  for  its  own  protection.''  The  by-laws  should 
outline  the  proper  procedure,*  which  must  conform  to  any 
statutory  requirements. 

A  bond  of  indemnity  is  usually  and  properly  required 
before  a  lost  certificate  is  replaced,  as  it  is  always  possible 

•National  Bank  v.  Watsontown  Bank,  105  U.  S.  217  (1881);  Birmingham  Na- 
tional Bank  v.  Roden,  91  Ala.  404  (1892);  Wheeler  v.  Millar,  90  N.  Y.  353   (1882). 

•Buffalo,  etc.  R.  R.  v.  Dudley,  14  N.  Y.  336  (347)  (1856);  Fletcher  v.  McGill, 
110  Ind.   395    (1887). 

'Guilford  V.  W.  U.  Tel.  Co.,  43  Minn.  434  (1890);  Butler  v.  Glen  Cove  Starch 
Mfg.  Co.,  18  Hun  47   (1879). 

'  The  usual  procedure  is  set  forth  in  the  by-laws  found  in  Form  24,  Article  I, 
8  2. 


TRANSI^ER  OP  STOCK.  71 

that  the  missing  certificate  may  turn  up  in  the  hands  of 
an  innocent  purchaser  for  value,  who  might  have  cause 
for  damages  against  the  corporation  if  it  refused  to  recog- 
nize his  rights.  It  is  but  seldom  wise  to  reissue  lost  cer- 
tificates unless  such  bond  is  given.  Only  the  absolute  and 
irrecoverable  loss  of  a  certificate,  as  in  case  of  its  un- 
questioned destruction  by  fire,  would  justify  an  unpro- 
tected reissue. 

When  the  value  of  missing  certificates  is  considerable 
and  the  circumstances  are  doubtful,  it  is  sometimes  best 
for  the  directors  to  refuse  absolutely  to  replace  the  cer- 
tificates until  the  owner  secures  an  order  from  some  court 
of  competent  jurisdiction.  When  this  is  done  the  direc- 
tors are  relieved  from  all  responsibility  in  the  matter. 
The  officers  of  the  company  should  never  take  the  re- 
sponsibility of  reissuing  a  lost  or  stolen  certificate  of  stock 
without  express  authorization  from  the  board  of  direc- 
tors. Should  they  do  so  and  the  missing  certificate  turn 
up  in  such  a  way  that  loss  is  involved,  they  would  be  re- 
sponsible to  the  corporation. 

In  case  certificates  are  lost  or  stolen,  the  secretary  of 
the  company  or  its  transfer  agent  should  be  immediately 
notified,  and  such  other  steps  be  taken  as  may  be  neces- 
sary to  prevent  the  negotiation  of  the  missing  certificates. 
When  lost  certificates  are  endorsed  in  blank  and  are  pre- 
sented to  the  transfer  officers  of  the  corporation  before 
these  officials  have  been  notified  of  the  loss,  they  may 
make  the  transfer,  and  the  corporation  will  not  be  liable 
to  the  owner  if  the  circumstances  were  such  as  to  justify 
the  belief  that  such  transfer  was  regular  and  in  good  faith. 
If,  however,  the  proper  officials  have  been  warned  of  the 
loss,  or  the  circumstances  were  such  as  to  put  them  on 
notice,  they  could  not  make  such  transfer  without  lia- 
bility. 

A  stock  certificate  is  not  perfectly  negotiable  as  are 


72  STOCK. 

notes,  drafts  and  other  forms  of  negotiable  paper,  but  is 
quasi-negotiable,  and  usually  an  innocent  purchaser  for 
value  of  a  properly  endorsed  certificate  is  protected.' 
"Excepting  in  cases  of  certificates  transferred  in  blank 
and  lost  or  stolen  without  negligence  on  the  part  of  the 
owner,  a  bona  fide  purchaser  is  protected  now  in  almost 
every  instance  where  he  would  be  protected  if  he  were 
purchasing  a  promissory  note  or  other  negotiable  instru- 
ment."^°  Thus  a  party  finding  or  stealing  certificates  of 
stock  even  though  these  certificates  are  endorsed  in  blank, 
takes  no  title  nor  does  any  one  who  buys  the  lost  or  stolen 
certificates  from  him,  the  title  remaining  in  the  original 
owner.^^  If,  however,  a  lost  or  stolen  certificate  is  sur- 
rendered to  the  corporation  and  a  new  certificate  received 
in  its  place — as  might  readily  be  the  case  if  the  corporate 
officials  were  not  promptly  notified  of  the  loss — any  pur- 
chaser in  good  faith  of  this  new  certificate  takes  a  clear 
title.  The  original  owner  has  then  lost  all  rights  in  the 
matter  save  that  of  bringing  suit  against  those  through 
whose  hands  the  certificate  passed  before  its  reissue  by 
the  corporation. 

In  case  of  any  doubt  or  any  dispute  as  to  ownership  of 
a  certificate,  no  transfer  should  be  made  by  the  corpora- 
tion until  the  true  ownership  has  been  definitely  deter- 
mined. 

§  42.     Pledges  of  Stock. 

The  quasi-negotiability  of  stock  renders  its  use  as  a 
pledge  or  collateral  security  a  very  simple  matter,  effected 
by  the  mere  endorsement  and  delivery  of  the  certificate.^^ 

•Knox  V.  Eden  Musee  Co.,  148  N.  Y.  441  (1896);  Simpson  v.  Jersey  City  Con- 
tracting Co.,  165  N.  Y.  193  (1900);  Bank  v.  Lanier,  11  Wall.  369,  377  (1870);  Trust 
&  Sav.   Co.  V.  Home  Lumber   Co.,   118   Mo.   447    (1893). 

>»2  Cook  on  Corp.,  §  416;  Railway  Co.  v.  Bank,  56  O.  St.  351  (1891);  Real 
Estate  Trust  Co.  v.  Bird,  90  Md.  229   (1899). 

"  East  Birmingham  Land  Co.  v.  Dennis,  85  Ala.  565  (1888) ;  O'Herron  v.  Gray, 
168  Mass.  573  (1897);  Bangor  Electric,  etc.  Co.  v.  Robinson,  52  Fed.  Rep.  520 
(1892). 

"Christian  v.  Atlantic  &  N.  C.  R.  R.,  133  U.  S.  233  (1890);  Seymour  v.  Hen- 
dee,  54  Feb.  Rep.   563   (1893);  Atkinson  et  al,  v.  Foster,   134  111.  472   (1890). 


TRANS:PER  OF  STOCK.  IZ 

The  usual  procedure  is  for  the  pledgor  to  give  his  note  for 
the  amount  secured,  the  note  reciting  the  pledge  of  stock 
and  the  terms  under  which  it  is  held.  These  terms  usu- 
ally empower  the  pledgee  to  sell  the  collateral  without 
notice  to  the  pledgor.  (See  Form  164.)  The  delivery 
of  the  stock  as  security  is,  however,  the  essential  feature, 
constituting  the  pledge  without  any  written  contract,^^ 
which  is  necessary  only  as  a  record  and  proof  of  the  trans- 
action. 

The  pledgee  may  or  may  not,  at  his  option,  have  the 
pledged  stock  transferred  on  the  books  of  the  corporation 
to  his  own  name.^'*  If  transferred,  the  word  "pledgee" 
should  follow  the  name  of  the  owner  on  the  new  certif- 
icates of  stock  or  otherwise  the  phrase  "as  collateral  se- 
curity" should  appear  on  the  certificates  so  as  to  definitely 
characterize  the  nature  of  the  pledgee's  holding.  A  mem- 
orandum of  the  facts  should  also  appear  in  the  stock 
ledger  against  the  entry  in  both  pledgee's  and  pledgor's 
accounts.^^  Such  entries,  if  showing  clearly  the  nature  of 
the  transaction,  relieve  the  pledgee  of  any  corporate  lia- 
bilities involved  in  the  absolute  ownership  of  the  stock.^^ 
In  some  states  the  pledgee  is  expressly  relieved  from  these 
liabilities  by  statute,^''  When  stock  is  transferred  on  the 
books  of  the  company  to  the  pledgee,  the  voting  right,  as 
a  general  rule  and  in  the  absence  of  any  agreement  to  the 
contrary,  follows  the  stock.^^  In  some  states,  however, 
as  in  New  York,  the  owner  of  the  stock  may  demand  and 
receive  a  proxy  from  the  pledgee  upon  paying  any  neces- 
sary expenses.     In  other  states,  as  New  Jersey,  if  it  ap- 

"Masury  v.  Arkansas  National  Bank,  93  Fed.  Rep.  603  (1899);  Spreckels  v. 
Nevada  Bank,  113  Cal.  272  (1896);  Brick  v.  Brick,  98  U.  S.  514  (.1878);  Mount 
Holly,  etc.  Co.  v.  Feree  et  al,  17  N.  J.  Eq.  117  (1864). 

"Day  V.  Holmes,  103  Mass.  306  (1869);  Fitchburg  Savings  Bank  v.  Torrey,  134 
Mass.  239   (1883);  Anderson  v.  Philadelphia  Warehouse  Co.,  Ill   U.  S.  479   (1884). 

"2  Cook  on  Corp.,  §  466. 

"Pauly  V.  State  Loan  &  Trust  Co.,  165  U.  S.  606  (1897);  Tourtelot  v.  Stolteben, 
101    Fed.    Rep.   362    (1900). 

"  Barre  National  Bank  v.  Hingham  Manuf.  Co.,  127  Mass.  563  (1879);  Burgess 
V.   Seligman,    107  U.   S.   20    (1882). 

"Commonwealth  v.  Dalzell,  152  Pa.  St.  217  (1893);  Re  Argus  Printing  Co.,  1  N. 
Dakota  434   (1891);   S.  C,   12  L.  R.  A.   781,  and  note. 


74  STOCK. 

pears  on  the  transfer  books  that  such  stock  has  only  been 
transferred  as  a  pledge,  the  owner  retains  the  right  to  vote 
thereon.  Statutes  protecting  the  voting  rights  of  pledgors 
are  found  in  many  states. 

When  stock  is  pledged,  the  pledgee  is  entitled  to  re- 
ceive any  dividends  declared  meanw^hile,  and  if  the  stock 
has  been  transferred  to  the  pledgee,  or  if  the  company 
has  been  properly  notified  that  the  stock  is  held  in  pledge, 
they  must  be  paid  to  him.^^  In  the  absence  of  notice  or 
transfer,  as  the  pledgor  remains  the  owner  of  record  of 
the  pledged  stock,  dividends  are  properly  paid  to  him. 
and  the  pledgor  and  pledgee  must  then  settle  the  owner- 
ship of  the  dividends  between  themselves.  On  the  ter- 
mination of  the  pledge,  the  pledgee  must  account  for  any 
dividends  received  by  him. 

Upon  default  in  payment  of  the  amount  it  secures,  the 
pledgee  has  the  right  to  sell  pledged  stock.  If  the  note  or 
other  memorandum  of  the  pledge  contains  no  agreement 
or  provision  for  such  sale,  the  pledgee  must  give  the 
pledgor  due  notice  of  his  intention  to  sell  the  stock  and 
thereupon  may  sell  the  stock  at  public  sale  and  apply  the 
proceeds  to  the  payment  of  his  debt.  Notice  must  be 
given  the  pledgor  a  reasonable  time  before  the  sale  and 
such  notice  must  specify  the  time  and  place  of  sale,  both  of 
which  must  also  be  reasonable.  Two  days'  notice  has  on 
occasion  been  held  sufficient,^"  and  four  days'  notice  when 
the  parties  lived  in  different  towns.^^ 

When  notice  of  time  and  place  is  waived  by  express 
terms  of  the  pledgor's  notice,  as  is  usually  the  case,  the 
pledgee  may  sell  at  any  time  after  default.  The  sale  must 
be  by  public  auction,  unless  otherwise  agreed,  must  be  in 
good  faith  and  an  endeavor  must  be  made  to  obtain  a  fair 
price.     The  pledgee  himself  may   not  bid  the   stock   in, 

"Fairbanks  v.  Merchants  National  Bank,  132  111.  120  (1889);  Guarantee  Co.  v. 
East  Rome  Co.,  96  Ga.  511  (1895);  Boyd  v.  Conshohocken  Worsted  Mills,  149  Pa. 
St  363   (1892). 

*•  Edwards  on  Bailments,   §   285. 

"  Guinzburg  v.   Downs  Co.,   165   Mass.   467    (1896). 


TRANSFER  OF  STOCK,  75 

either  directly  or  indirectly.  If  he  does,  the  pledgor  may 
have  the  sale  set  aside.  In  many  of  the  states  the  whole 
matter  of  the  pledge  of  stock  and  its  sale  is  regulated  by 
statute. 

At  any  time  before  sale  the  pledgor  may  pay  the  debt 
and  all  interest  and  any  reasonable  expense  involved  in 
the  preliminaries  of  the  sale  and  claim  his  stock.  This 
stock  need  not  be  the  particular  shares  pledged  but  merely 
an  equal  amount  of  the  same  stock. 


§  43.     Restrictions  on  Transfers. 

Every  stockholder  whose  stock  is  paid  for  in  full 
is  entitled  to  transfer  his  stock  freely.  Even  where 
the  stockholders  have  entered  into  a  contract  to  restrain 
the  alienation  of  stock  or  have  enacted  by-laws  for  the 
same  purpose,  the  courts  have  usually  set  the  restraining 
provisions  aside  as  being  contrary  to  public  policy.^^ 

In  some  states  the  statutes  prescribe  specifically  that 
stock  subscribed  for  but  not  fully  paid  in  accordance  with 
the  subscription  agreement  is  not  transferable  save  with 
the  consent  of  the  corporation.  Elsewhere  charter  or  by- 
law provisions  may  give  the  corporation  the  right  to  re- 
fuse to  register  transfers  of  unpaid  stock. ^-^  In  the  ab- 
sence of  such  provision,  the  right  of  transfer  is  absolute 
and   may   be   enforced   against   the   corporation.^"*      (See 

§48.) 

At  times  the  restriction  of  stock  transfers  becomes  de- 
sirable and  various  plans  have  been  attempted  to  efifect 
this  end.  The  courts,  however,  defend  this  right  so 
strictly  that  its  legal  waiver  is  difficult.     Perhaps  the  most 

"Johnson  v.  Laflin,  103  U.  S.  800  (1880);  Fisher  &  Asso.  v.  Essex  Bank,  5 
Gray  (Mass.)  373  (1855);  Quiner  v.  Marblehead,  elc.  Co.,  10  Mass.  476  (1813); 
Kinnan  v.  Sullivan  County  Club,  26  App.  Div.  213  (1898). 

*•  Barrett  v.  King,  181  Mass.  476  (1902).  For  a  discu.ssion  of  the  best  means  to 
restrain  the  sale  of  stock,  see  Conyngton  on  Corp.  Organization,  §  217. 

"Craig  V.  Hespeira  L.  &  W.  Co.,  113  Cal.  7  (1896);  Kinnan  v.  Sullivan  County 
Qub,  26  App.  Div.  213   (1898). 


76  STOCK. 

successful  method  when  all  the  parties  are  in  agreement 
as  to  the  advisability  of  such  restraint  is  to  form  a  voting 
trust  for  a  certain  number  of  years.  All  the  stock — or 
all  the  stock  entering  into  the  agreement — is  placed  in  the 
hands  of  voting  trustees  appointed  under  the  terms  of  the 
voting  trust  agreement  and  is  held  by  them,  withdrawn 
from  sale,  for  the  period  of  the  trust.  Such  arrangements 
are  effectual  and  are  upheld  by  the  courts  in  most  states 
if  they  do  not  extend  for  an  unreasonable  period.^^  In 
some  states  they  are  expressly  permitted  by  the  statutes 
under  restrictions  as  to  the  term  of  their  duration. 


"Brown  v.  Britton,  41  App.  Div.  57  (1899);  Williams  v.  Montgomery,  148  N.  Y. 
519  (1896);  Hey  v.  Dolphin,  92  Hun  (N.  Y.)  230  (1895);  S^e  Conyngton  on  Corp. 
Organization,   §   217. 


CHAPTER  VII. 
RULES  REGULATING  TRANSFERS. 


§  44.     Responsibility  of  Corporation  as  to  Transfers. 

It  is  the  duty  of  the  corporation  to  record  all  lawful 
transfers,  and  if  it  refuses,  the  record  may  be  compelled 
by  recourse  to  the  courts^  or  the  corporation  may  be  held 
liable  in  damages.^  If  there  is  doubt  as  to  the  identity  of 
the  transferee  or  the  authenticity  of  the  transferrer's  sig- 
nature, the  corporation  may  require  proper  proof  thereof, 
and  in  cases  where  two  parties  claim  the  ownership  of 
stock  or  where  the  corporation  has  been  notified  not  to 
register  a  transfer,  the  corporation  may,  if  there  is  any 
real  uncertainty  or  reason  therefor,  decline  to  make  any 
record  on  the  corporate  books  until  the  matter  has  been 
settled  by  the  courts.^     (See  §  38.) 

The  corporation  is  responsible  if  its  officials  record  a 
forged  transfer.'^  It  is  the  duty  of  the  corporate  officials 
to  know  the  stockholders'  signatures  or  otherwise  to  se- 
cure evidence  of  their  authenticity  before  making  a  trans- 
fer. For  this  purpose,  they  may  require  the  personal  at- 
tendance of  the  transferrer  or  clear  proof  that  his  signa- 
ture is  genuine.     (See  §§  38,  45.) 

In  case  stock  certificates  endorsed  in  blank  are  lost  or 
stolen,  the  corporation  is  not  liable  for  receiving  the  cer- 

1  Real  Estate  Trust  Co.  v.  Bird,  90  Md.  229  (1899) ;  Rice  v.  Rockefeller  et  al, 
134  N.  Y.   174   (1892). 

»Hine  v.  Commercial  Bank  of  Bay  City,  119  Mich.  448  (1899);  Ralston  v.  Bank 
of  California,  112  Cal.  208  (1896);  Commercial  Bank,  etc.  v.  Kortright,  22  Wend. 
(N.    Y.)    348    (1839). 

•Tel.   Co.  V.  Davenport,  97   U.   S.   369   (1878). 

♦Cushman  v.  Thayer,  etc.  Co.,  76  N.  Y.  365  (1879);  Chicago  Edison  Co.  v. 
Fay,  164  111.  323  (1896). 

n 


78  STOCK. 

tificates  and  transferring  the  stock  represented  thereby,  if 
the  circumstances  are  not  suspicious  and  the  transfer  is 
made  before  notice  of  the  theft  or  loss  is  received  by  the 
corporation.^     (See  §  41.) 

§  45.     Duties  of  Officers  as  to  Transfers. 

"The  officers  of  the  company  are  the  custodians  of  its 
stock  books,  and  it  is  their  duty  to  see  that  all  transfers  of 
shares  are  properly  made,  either  by  the  stockholders 
themselves  or  persons  having  authority  from  them.  If 
upon  the  presentation  of  a  certificate  for  transfer  they  are 
at  all  doubtful  of  the  identity  of  the  party  offering  it  with 
its  owner,  or  if  not  satisfied  of  the  genuineness  of  a  power 
of  attorney  produced,  they  can  require  the  identity  of  the 
party  in  one  case,  and  the  genuineness  of  the  document  in 
the  other,  to  be  satisfactorily  established  before  allowing 
the  transfer  to  be  made.  In  either  case  they  must  act  on 
their  own  responsibility."^  The  record  of  any  proper 
transfer,  if  refused,  may  be  compelled  by  either  transferrer 
or  transferee. 

§  46.     Who  May  Transfer  Stock. 

Any  person  of  full  age  who  has  not  been  adjudged  in- 
competent, may  transfer  stock  standing  in  his  own  name. 
All  who  are  duly  authorized  to  represent  others,  as  attor- 
neys, trustees,  guardians,  executors  and  administrators, 
may  transfer  stock  belonging  to  these  others  upon  giving 
satisfactory  evidence  of  their  authority  so  to  do.  Stock 
belonging  to  minors  and  others  incompetent  to  contract 
may  be  transferred  only  by  their  legally  appointed  and  au- 
thorized representatives. 

The  holder  of  unpaid  stock,  i.  e.  stock  upon  which  the 

•  Mandelbaum  v.  North  American  Mining  Co.,  4  Mich.  464  (1857);  Barstow  v. 
Savage  Min.  Co.,  64  Cal.  388  (1883);  Dewing  v.  Perdicans,  96  U.  S.  193  (1877); 
Wells  V.  Smith,  7  Abb.  Pr.  261  (1858);  Brown,  Lancaster  &  Co.  v.  Howard  Fire  Ins. 
Co.,  42  Md.  384   (1875). 

•Tel.  Co.  V.  Davenport,  97  U.  S.  369  (1878). 


RULES  ri;gui<ating  transi^ers.  79 

subscription  or  purchase  price  has  not  been  fully  paid, 
may  as  a  rule  transfer  his  stock  without  restriction,  but  in 
some  states  by  statute  provision  such  transfer  is  prohibited 
or  may  only  be  made  by  consent  of  the  corporation. 

§  47.     To  Whom  Stock  May  be  Transferred. 

There  are  but  few  restrictions  as  to  the  transferees  of 
stock.  A  corporation  may,  if  its  officials  see  fit,  refuse  to 
transfer  stock  to  any  one  not  competent  to  assume  the 
obligations  of  a  stockholder,  such  as  a  minor  or  a  person 
of  unsound  mind.  (See  §  53.)  Also  a  corporation  when 
in  a  failing  condition  may  refuse  to  transfer  stock  to  an 
irresponsible  transferee.^  Beyond  these  few  exceptions, 
stock  may  be  transferred  freely  and  in  the  absence  of 
fraud  the  transfer  is  valid  and  must  be  recorded  by  the 
corporation. 

§  48.     Liability  Involved  in  Transfers. 

The  liability  of  unpaid  stock  obtains  in  every  state  of 
the  Union.  (See  §  73.)  Full-paid  stock,  on  the  other 
hand,  involves  no  liability  to  the  corporation  or  its  credi- 
tors whatsoever,  save  in  the  case  of  financial  institutions 
— on  the  stock  of  which  a  further  liability  is  usually  im- 
posed— and  in  those  states  in  which  by  express  statutory 
provision  liabilities  are  imposed  or  assessments  are  per- 
mitted on  stock  even  though  full-paid.      (See  §  74.) 

When  liabilities  do  or  may  exist  on  full-paid  stock,  and 
transfers  of  such  stock  are  made  between  parties  com- 
petent to  contract,  any  liabilities  accruing  before  the  trans- 
fer remain  with  the  transferrer,  but  any  liabilities  accru- 
ing thereafter  pass  to  the  transferee. 

The  liabilities  of  unpaid  stock  are  aflfected  by  statute 
provisions  in  a  number  of  states  (See  §  74),  but  other- 
wise are  subject  to  the  general  rules  that  the  transferrer 

^  2  Cook  on  Corps.,  §  396. 


80  STOCK. 

is  liable  for  any  calls  or  assessments  already  made  and 
which  are  still  unpaid,^  but  the  transferee  is  liable  for  the 
amount  that  has  not  yet  been  called. 

An  exception  to  this  general  rule  obtains  when  a  trans- 
fer has  been  made  but  has  not  been  recorded  on  the  books 
of  the  corporation.  In  such  case  the  transferrer  is  still 
the  owner  of  record  (See  §  33)  and  is  therefore  still  liable 
for  any  amounts  unpaid  on  his  transferred  stock,  and  if 
calls  are  made  before  the  transfer  is  recorded,  must  pay 
them.  He  may  collect  these  payments,  if  he  can,  from  the 
transferee. 

Another  exception  to  the  general  rule  is  found  when 
the  corporation  has  wrongfully  issued  stock  certificates 
marked  "Full-paid,"  in  which  case  any  bona  fide  purchaser 
of  such  certificates  without  knowledge  of  the  true  char- 
acter of  the  stock  takes  it  free  from  liability  to  the  cor- 
poration and  to  corporate  creditors  in  case  the  corporation 
becomes  insolvent.^  This  is  also  true  when  a  purchaser 
in  good  faith  takes  over  stock  under  such  circumstances 
as  to  lead  him  to  believe  it  is  full-paid.  In  any  such  case 
as  far  as  the  transferee  is  concerned,  the  stock  is  held  to 
be  full-paid  and  the  corporation  or  its  creditors  cannot 
hold  him  liable. 

In  the  following  cases  the  rule  as  to  the  liabilities  in- 
volved in  transfers  of  stock  is  as  set  forth. 

A  married  woman  may  take  stock  in  her  own  name, 
in  practically  every  state  of  the  Union,  and  take  therewith 
every  right  and  responsibility  of  ownership.^" 

A  minor  may  receive  a  transfer  of  stock  and  the  cor- 
poration may  record  it  if  the  corporate  officials  see  fit,  but 
as  the  minor  may  at  will  repudiate  the  whole  transaction, 
the  transferrer  remains  liable.^^     (See  §  53.)     The  same 

•May  V.  McQuillan,  129  Mich.  392  (1902);  Brigham  v.  Mead,  92  Mass.  245 
(1865);  Sigua  Iron  Co.  v.  Brown,  171  N.  Y.  488  (1902);  Webster  v.  Upton,  Assi- 
gnee, 91  U.   S.  65    (1875);   Pullman  v.   Upton,  96  U.   S.  328   (1877). 

•Rochester,  etc.  Co.  v.  Roe,  7  App.  Div.  (N.  Y.)  366  (1896);  Sprague  v.  Na- 
tional Bank,   172  111.   149   (1898);  42  L,.  R.  A.  606. 

>»Cook  on   Corp.,   SS   250,   396. 

"Ruchizky  v.  De  Haven,  97  Pa.  St.  202  (1881);  Foster  v.  Chase,  75  Fed.  Rep. 
797   (1896);   Foster  v.   Wilson,   75   Fed.   Rep.   797    (1896). 


RULES  REGULATING  TRANSFERS.  ^1 

rule  holds  as  to  a  transfer  to  a  person  known  to  be  insol- 
vent, the  transferrer  not  being  relieved  from  liability.^^ 
(See  §  47-) 

A  transfer  to  an  agent,  attorney,  trustee,  guardian,  ad- 
ministrator or  executor  in  his  own  name  followed  by  a 
statement  of  the  capacity  in  which  he  acts,  as  "James  H. 
McLane,  Agent,"  renders  him  personally  liable  on  the 
stock  so  held,^^  except  where  expressly  exempted  by 
statute.^"*  (See  §§  51-52.)  The  same  is  true  where  a 
transfer  is  made  to  the  treasurer  of  a  corporation  in  his 
own  name,  as  "Henry  James,  Treasurer."^^ 

A  transfer  to  two  persons,  as  "George  Howard  and 
John  Mackel,"  makes  them  tenants  in  common  and  each 
may  be  held  for  one-half  of  any  liability  on  such  stock  and 
both  must  join  in  a  transfer.^^  A  transfer  to  a  firm,  how- 
ever, as  "Howard  &  Mackel,"  does  not  have  this  efTect  but 
creates  a  partnership  holding  and  a  partnership  liability.^' 
(See  §  56.) 

A  transfer  to  an  existing  corporation  authorized  to 
hold  stock,  as  "The  Strathmore  Scale  Company,"  renders 
the  assignee  corporation  liable  as  is  an  individual  on  the 
stock  transferred.  A  transfer  to  a  membership  corpora- 
tion or  unorganized  association,  as  "Grace  Methodist 
Church"  or  the  "Brooklyn  Decorators'  Union,"  is  of  doubt- 
ful legality,  and,  if  the  matter  of  liability  is  of  importance, 
should  not  be  recorded  by  the  corporation  until  the  right 
of  the  body  to  hold  stock  has  been  proved.  If  not  au- 
thorized to  hold  stock,  it  cannot  assume  the  liabilities  of  a 
stockholder. 

A  transfer  to  a  dummy  stockholder,  as  in  case  of  trans- 

"Bowden  v.  Johnson,  107  U.  S.  251  (1882);  Rochester,  etc.  Co.  v.  Raymond, 
158   N.    Y.    576    (1899). 

"McKim  V.  Glenn,  Trustee,  66  Md.  479  (1887);  Baines  v.  Babcock.  95  Gal.  581 
(1892);  Wadsworth  v.  Laurie,  164  III.  42  (1896);  Brown  v.  Ellis,  103  Fed.  Rep.  834 
(1900);  Winston  v.  Dorset  Pipe,  etc.  Co.  129  111.  64  (1889). 

"Davis  V.  Essex  Baptist  Society,  44  Conn.  582  (1877);  Lucas  v.  Coe,  86  Fed. 
Rep.  972   (1898). 

"  2  Cook  on  Corp.,  8  724,  and  notes. 

"Markell  v.  Ray,  75  Minn.   138   (1898). 

"Barton  National  Bank  et  al.  v.  Atkins  et  al.,  72  Vt.  33  (1899). 


82  STOCK. 

fer  to  any  other  agent,  renders  the  dummy  liable  if  he  has 
property  sufficient  to  make  the  liability  effective. -^^  The 
party  for  whom  the  dummy  is  acting  is,  however,  likewise 
liable  as  an  undisclosed  principal. ^^  A  transfer  to  a  pledgee 
m  his  own  name  without  qualification  renders  him  liable. 
It  is  otherwise,  however,  if  the  nature  of  the  transfer  is 
shown  by  its  form,  as  "Howard  Fielding,  Pledgee. ^"^ 

§  49.     Form  of  Transfer. 

A  general  form  of  assignment  for  stock  is  always 
printed  or  engraved  upon  the  back  of  each  stock  certificate 
(See  Forms  19,  20.)  If  there  were  any  reason  therefor, 
stock  might  with  equal  effect  be  transferred  by  means  of 
a  separate  assignment  written  or  printed  and  attached  to 
its  certificate.  In  such  case  the  certificate  should  be  more 
fully  described  and  identified  than  is  the  case  in  the  usual 
form  of  assignment.     (See  §  38.) 

The  signature  to  the  assignment  of  a  stock  certificate 
must  correspond  exactly  with  the  name  on  the  face  of  the 
certificate  and  should  be  witnessed.  If  the  signature  of 
the  transferrer  is  entirely  unknown  to  the  transfer  officer 
or  agent,  it  should  be  guaranteed  by  some  responsible 
party  or  be  acknowledged  before  a  notary  public. 

If  the  party  signing  a  transfer  of  stock  acts  in  a  repre- 
sentative capacity,  a  description  of  the  capacity  in  which 
he  signs  should  be  added  to  the  signature,  as  "Howard 
Fielding,  Trustee  for  Jane  Hathaway."  If  a  certificate,  is- 
sued in  her  maiden  name,  is  to  be  transferred  by  a  married 
woman,  the  signature  should  be  in  the  following  form: 
"(Mrs.)  Alice  H.  Walker  formerly  Alice  H.  Ainsley."  Oc- 
casionally a  married  woman  holding  stock  in  her  maiden 
name  wishes  it  transferred  to  the  name  acquired  by  mar- 

"Dunn  V.   Howe,   107   Fed;   Rep.   849    (1901). 

"Pauly  V.  State,  etc.  Co.,  165  U.  S.  606  (1897);  Davis  v.  Stevens,  7  Fed.  Cas. 
177   (1879). 

•"Robinson  v.  Southern  National  "Rank,  180  U.  S.  295  (1901);  Pauly  v.  State 
Loan  &  Trust  Co.,   165   U.   S.   606    (1897). 


RULES  REGULATING  TRANSFERS.  83 

riage.  In  such  case  the  signature  to  the  assignment  is 
similar  to  that  just  given  and  the  blank  for  the  name  of 
the  transferee  is  filled  in  as  follows:  "(Mrs.)  Alice  H. 
Walker." 

The  name  of  the  transferee  should  be  written  in  the 
proper  blank  of  the  assignment  form  without  abbreviation, 
complimentary  title  or  suffix,  though  where  the  transferee 
is  a  woman,  the  designation  "(Miss)"  or  "(Mrs.),"  as  the 
case  may  be,  is  frequently  and  properly  placed  before  the 
name. 

When  a  transfer  of  stock  is  to  be  received  by  an  agent, 
it  should  be  made  out  in  the  name  of  his  principal,  unless 
the  agent  is  willing  to  assume  any  statutory  liability  on 
the  stock  transferred.  (See  §  48.)  When  stock  is  trans- 
ferred by  an  agent  or  one  acting  for  another,  the  name  of 
the  principal  should  be  appended  to  the  assignment  fol- 
lowed by  the  agent's  name  and  a  statement  of  the  capacity 
in  which  he  signs ;  thus,  "Frank  H.  McClelland  by  Howard 
James,  Attorney." 

§  50.     Transfers  to  and  by  Agents. 

Any  person  competent  to  contract  and  wishing  to 
transfer  stock,  may  transfer  stock  or  receive  the  transfer 
of  stock  through  an  agent.  In  case  of  transfer,  the  agent 
or  attorney  in  fact  should  present  the  certificate  to  be 
transferred,  accompanied  by  his  power  of  attorney  or  a 
duly  acknowledged  copy  thereof,  which  should  be  left  on 
file  with  the  transfer  agent  or  officer  of  the  corporation. 
Express  authority  to  transfer  stock  should  be  given  by 
the  power  of  attorney  and,  if  necessary,  evidence  should 
be  furnished  that  the  signature  to  the  power  is  genuine, 
that  the  instrument  is  still  in  force  and  that  the  party  pre- 
senting it  is  the  party  named  therein.^^ 

"Tel.  Co.  V.  Davenport,  97  U.  S.  369  (1878);  Bayard  v.  Farmers',  etc.  Bank, 
52  Pa.  St.  232  (1866);  Davis  v.  Bank,  2  Bing.  (Eng.  Rep.)  393  (1824);  Ireland  v. 
Hart,  86  L.  T.  Rep.   (Eng.  Rep.)   384   (1902), 


84  STOCK. 

In  case  of  transfer  by  an  agent,  it  is  the  duty  of  the 
corporation  to  require  satisfactory  evidence  of  the  agent's 
authority.  Otherwise  in  case  of  a  fraudulent  transfer  the 
corporation  is  liable.^^  The  corporation  is  also  liable  if, 
with  knowledge  of  the  facts,  it  recognizes  a  power  of  at- 
torney executed  by  a  minor,  an  insane  person  or  any  one 
else  unable  to  contract.^^ 

In  case  of  transfers  of  stock  to  an  agent,  the  cer- 
tificates, as  stated,  should  be  issued  in  the  principal's  name, 
the  agent  merely  receiving  the  certificates  and  receipting 
therefor  for  account  of  his  principal. 

If  a  certificate  is  endorsed  in  blank  and  entrusted  to 
an  agent  and  the  agent  assigns  the  stock  fraudulently,  the 
stockholder  has  no  recourse  save  against  the  agent,  as  his 
own  act  made  it  possible  for  his  agent  to  perpetrate  the 
fraud.  The  rule  is  different,  however,  if  the  agent  trans- 
fers the  stock  directly  into  his  own  name.  In  such  case,  if 
the  corporation  knew  of  the  agency,  it  is  liable,^'*  and  the 
original  owner  will  not  be  estopped  from  reclaiming  the 
stock.^' 

§  51.     Transfers  to  and  by  Executors  and  Administrators. 

A  corporation  cannot  refuse  to  record  transfers  of 
stock  belonging  to  an  estate,  made  by  the  executor  or 
administrator  of  such  estate,  provided  the  proper  letters 
testamentary  or  letters  of  administration  are  presented  for 
inspection. ^^  Such  executor  or  administrator  may  trans- 
fer the  stock  directly  from  the  deceased  party  to  a  pur- 

"Tafft  V.  Presidio,  etc.  R.  R.  Co.,  84  Cal.   131    (1890);   Caulkins  v.  Gaslight  Co., 

85  Tenn.  683  (1887);  Cooper  v.  Illinois  Central  R.  R.  Co.,  38  App.  Div.  (N.  Y.)  22 
(1899);  Geyser-Marion  Gold-Min.  Co.  v.  Stark,  106  Fed.  Rep.  558  (1901);  Tel.  Co. 
V.  Davenport,  97  U.   S.   369    (1878). 

2'  Chew  &  Goldsborough  v.    Bank  of  Baltimore,    14   Md.   299    (18S9). 

=«  McNeil  V.  Tenth  National  Bank,  46  N.  Y.  325  (1871);  O'Herron  v.  Gray,  168 
Mass.  573  (1897);  Nelson  et  al,  Ex'rs  v.  Owen,  113  Ala.  372  (1896):  see  Knox  v. 
Eden  Musee  Co.,  148  N.  Y.  441  (1896);  Tafft  v.  Presidio,  etc.  R.  R.  Co.,  84  Cal.  131 
(1890). 

»Tel.  Co.  V.  Davenport,  97  U.  S.  369  (1878):  McNeil  v.  Tenth  National  Bank, 
46  N.  Y.  325   (1871);  Elliott  v.  Miller  &  Co.,  158  Fed.  Rep.  868   (1908). 

*•  Carter  v.  Manufacturers'  Nat.  Bank,  71  Me.  448  (1880);  Marbury,  Trustee  v. 
Ehlen  et  al,  72  Md.  206  (1890);  Wooten  v.  Railroad,  128  N.  C.  119   (1901). 


RULES  REGULATING  TRANSFERS.  85 

chaser,  or  may  transfer  the  stock  to  his  own  name  as  ad- 
ministrator or  executor,^''  or  may  pledge  the  stock  if  this 
be  necessary.  The  corporation  should  not,  however,  per- 
mit him  to  transfer  the  stock  into  his  individual  name.^® 
When  there  are  two  or  more  executors  of  an  estate,  one 
alone  may  not  transfer  stock;  all  must  join.^^ 

Before  a  transfer  of  stock  by  an  executor  or  adminis- 
trator is  allowed,  a  certified  copy  of  the  appointment  of 
the  party  acting  should  be  filed  with  the  corporation.^^ 
Or  in  case  there  is  a  will,  a  certified  copy  of  this  instru- 
ment should  be  presented  for  inspection.-'^  The  will  or 
certified  copy  should  always  be  inspected  by  the  corporate 
officials  before  the  transfers  of  an  executor  are  recognized, 
as  the  free  right  of  transfer  may  be  restricted  by  the  terms 
of  the  instrument  under  which  he  is  acting,  and  if  so,  pur- 
chasers and  corporate  officials  are  bound  to  take  notice  of 
and  be  governed  by  these  limitations.^^ 

Corporate  officials  recording  transfers  of  executors  or 
administrators  with  knowledge  that  a  fraud  or  breach  of 
official  duty  is  involved  therein,  are  liable  to  the  estate. ^^ 
An  administrator  or  executor  cannot  compel  the  transfer 
of  stock  belonging  to  the  estate  when  the  corporation  is 
domiciled  in  another  state.  A  purchaser  of  stock  from 
such  an  administrator  or  executor  can,  however,  compel 
the  corporation  to  recognize  his  right  of  property  in  the 
purchased  stock  and  to  issue  to  him  new  certificates.^"* 

When  a  trust  discharged  by  an  executor  or  adminis- 
trator continues  for  a  long  period,  the  executor  or  admin - 

*^  London,   Paris  &  Am.   Bank  v.   Aronstein,    117   Fed.    Rep.    601    (1902). 

"2  Cook  on  Corp.,  S  398;  London,  Paris  &  Am.  Bank  v.  Aronstein,  117  Fed. 
Rep.   601    (1902). 

"Bohlen's  Estate,  75  Pa.  St.  304  (1874);  Tunis  v.  Pass.  R.  R.  Co.,  149  Pa.  St. 
70   (1892);   10  Cyc,  p.   594. 

•»Schell  V.   Deperven,   198  Pa.   St.   591    (1901). 

"Carter  v.  Manufacturers'  Nat.  Bank,  71  Me.  448  (1880);  Marbury,  Trustee  v. 
Ehlen  et  al,  72  Md.  206  (1890);  Wooten  v.  Railroad,  128  N.  C.   119   (1901). 

"Nutting  et  al,  v.  Thomasson  et  al,  57  Ga.  418  (1876);  Weyer,  Admr.  v.  Second 
Nat.   Bank  of  Franklin,   57   Ind.    198    (1877). 

"Shaw  V.  Spencer.  100  Mass.  382  (1868);  Smith  v.  Ayer,  101  U.  S.  320  (1879); 
Gottberger  v.  United  States  National  Bank,  131  N.  Y.  595  (1892);  Moore  v.  Ameri- 
can Loan  &  Tr.  Co.,   115   N.  Y.  65    (1889). 

"Matter  of  Fitch,  160  N.  Y.  87  (1899);  Luce  v.  Railroad,  63  N.  H.  588  (1885). 


86  STOCK. 

istrator  becomes  in  fact  a  trustee  and  his  transfers  then 
become  subject  to  the  rules  governing  trustees.^^  (See 
§  52.)  The  corporation  must  then  refuse  the  transfer  of 
stock  unless  the  executor  or  administrator  brings  satis- 
factory evidence  of  his  right  to  make  such  transfer. 

§  52.     Transfers  to  and  by  Trustees. 

The  corporate  officials  must  refuse  the  transfers  of  a 
trustee  unless  his  authority  is  clearly  established.  His 
appointment  must  be  in  writing  and  expressly  authorize 
the  sale  or  transfer  of  stock.  If  such  instrument  exists  in 
due  form,  the  trustee  may  compel  transfers  by  the  cor- 
poration when  the  certificates  of  stock  are  duly  assigned 
by  him  in  his  representative  capacity.^^ 

The  corporation  is  responsible  if  it  permits  any  trans- 
fer by  a  trustee  not  authorized  by  the  trust  instrument.'*^ 
If  there  is  more  than  one  trustee,  all  must  sign  the  trans- 
fer,^* which  should  be  accompanied  by  a  properly  certified 
copy  of  the  instrument  of  trust  establishing  clearly  the 
authority  of  the  trustees  to  make  such  transfer.  Trus- 
tees appointed  by  court  should  show  a  copy  of  the  court 
appointment. 

Before  stock  is  purchased  from  a  trustee — provided 
the  certificates  of  stock  indicate  that  he  is  a  trustee — the 
purchaser  should  ascertain  whether  the  trustee  is  au- 
thorized to  make  the  sale.^^  "Certificates  for  shares 
of  stock  running  to  'A.  B.,  Trustee,'  or  to  'A.  B.  in 
trust,'  without  disclosing  the  names  of  beneficiaries  or 
the  particulars  of  the  trust,  is  notice  to  a  purchaser  of 

"Peck  V.  Bank,  16  R.  I.  710  (1890);  2  Cook  on  Corp.,  §  398. 

"Bird  V.  Chicago,  etc.  R.  R.,  137  Mass.  428  (1884);  Loring  v.  Salisbury  Mills, 
12s  Mass.   138   (1878). 

"  Marbury,  Trustee  v.  Ehlen  et  al,  72  Md.  206  (1890);  Geyser-Marion  Gold-Min. 
Co.  V.  Stark,  106  Fed.  Rep.  558  (1901);  Bird  v.  Chicago,  etc.  R.  R.,  137  Mass.  428 
(1884);  Loring  v.   Salisbury  Mills,   125  Mass.   138   (1878). 

"Bohlen's  Estate,  75  Pa.  St.  304,  312  (1874);  Oliver  v.  Governor  &  Co.,  86  1,.  T. 
Rep.   248   (1902). 

"First  National  Bank  v.  National  Broadway  Bank,  156  N.  Y.  459  (1898);  Shaw 
T.  Spencer  et  al  100  Mass.  382  (1868). 


RUL^S  REGULATING  TRANSI^ERS.  8/ 

shares  that  *A.  B.'  does  not  hold  them  in  his  own  right 
but  as  a  trustee.'"*" 

When  transfers  are  made  to  a  trustee,  his  represent- 
ative capacity  should  be  clearly  indicated  by  reference  in 
the  certificate  to  the  will  or  other  instrument  under  which 
the  trusteeship  was  created/^  and  the  name  of  the  bene- 
ficiary should  be  mentioned  when  possible;  thus,  "John 
Hayden,  Trustee  for  Howard  Waller  under  the  will  of 
Horace  Waller." 

§  53.     Transfers  to  and  by  Minors. 

A  corporation  may  refuse  to  transfer  stock  to  a  minor 
as  he  is  incapable  of  assuming  the  obligations  of  a  stock- 
holder.'*^ In  case  such  a  transfer  is  made,  the  liability  of 
the  transferrer  as  a  stockholder  of  the  corporation  con- 
tinues until  the  minor  becomes  of  age  and  ratifies  the 
transfer.'*^  Minors  may  receive  and  hold  stock  in  their 
own  names  but  cannot  transfer  stock  so  held.  Assign- 
ments should  therefore  be  made  to  their  guardians  in  the 
following  form:  "Alfred  Carr  (minor)  under  guardian- 
ship of  Henry  B.  Boerum." 

A  minor  is  himself  unable  to  make  a  legal  transfer  of 
stock  even  though  the  stock  is  held  in  his  name,  and  the 
corporation  renders  itself  liable  for  any  resulting  damages 
if  it  records  such  transfer.  The  only  legal  method  of 
transferring  a  minor's  stock  is  therefore  by  assignment 
executed  by  a  duly  appointed  guardian.'*'*     (See  §  54.) 

§  54.    Transfers  to  and  by  Guardians. 

Certificates  for  stock  owned  by  minors  or  other  per- 
sons not  competent  to  contract  should  properly  be  issued 

*•  Gerard  v.  McCormick,  130  N.  Y.  261  (1891). 

"  Geyer-Marion  Gold-Min.   Co.  v.   Stark,   106  Fed.   Rep.   558   (1901). 

"  2  Cook  on  Corp.,  §  396. 

"Foster  v.  Wilson  et  al,  75  Fed.  Rep.  797  (1396);  Ruchizky  v.  De  Haven,  97 
Pa.   St.  202   (1881). 

♦«  Smith  V.  Baker,  42  Hun  (N.  Y.)  S04  (1886);  White  v.  New  Bedford,  etc. 
Corp.,   178  Mass.  20    (1901). 


§8  STOCK. 

in  the  name  of  the  trustee  or  guardian  of  such  person. 
(See  §  53.)  In  most  states  parties  not  competent  to  con- 
tract cannot  transfer  stock  and  therefore  all  transfers  of 
stock  belonging  to  such  persons  m.ust  be  made  by  their 
legally  appointed  trustees  or  guardians. 

Usually  the  statutes  require  the  guardian  of  a  minor 
to  be  specially  authorized  by  order  of  a  proper  court  be- 
fore he  may  sell  stock  belonging  to  his  ward,  and  the  cor- 
poration cannot  safely  record  a  transfer  of  a  minor's  stock 
though  made  by  his  guardian  until  it  ascertains  the  ex- 
istence of  such  authority.'*^  The  guardian  should  there- 
fore secure  proper  authority  and  file  a  certified  copy 
thereof  with  the  secretary  of  the  corporation  before  or  at 
the  time  the  transfer  is  made. 

When  no  statutes  regulate  the  sale  of  stock  by  guar- 
dians, a  guardian  may  freely  transfer  stock  without  any 
special  court  authorization,"*^  though  in  this  case  it  is  safer 
for  him  to  obtain  authority  from  the  court  as  a  measure  of 
self  protection.  A  guardian  has  no  authority  to  pledge 
stock/^ 


§  55.     Transfers  to  and  by  Corporations. 

Under  the  common  law,  one  corporation  cannot  hold 
stock  in  another.'*^  In  a  number  of  states,  however,  cor- 
porations are  by  statute  expressly  authorized  to  hold  stock 
of  other  corporations,  or  may  be  so  authorized  by  in- 
clusion of  the  power  in  their  charters.  Even  where  this 
is  not  the  case,  the  general  rule  has  been  relaxed,  and  it 
may  now  be  said  in  general  that  a  corporation  may  be- 
come a  stockholder  in  another  corporation  wherever  the 
stock  is  acquired  in  pursuance  of  a  legitimate  purpose  of 

"Atkinson  v.  Atkinson,  90  Mass.  IS  (1864);  O'Herron  v.  Gray,  168  Mass.  573 
(1897). 

"Lamar  v.  Micou,  112  U.  S.  452  (1884). 

"O'Herron  v.   Gray,   168   Mass.    573    (1897). 

"People  V.  Chicago  Gas  Co.,  130  III.  268  (1889);  De  La  Vergne  Co.  v.  German 
Savings  Inst.,   175  U.   S.  40   (1899). 


kULES  REGULATING  TRANSFERS.  89 

its  creation.''^  Hence  an  investment  company,  an  insur- 
ance company,  a  trust  company  and  others  of  similar  char- 
acter, may  properly  invest  in  and  hold  the  stock  of  other 
corporations.  Also  corporations  may  acquire  stock  by 
foreclosure  proceedings  or  may  take  it  in  order  to  escape 
loss,  as  for  instance,  in  settlement  of  a  debt.^°  Also  the 
so-called  "holding"  corporations  are  not  uncommon  in  the 
present  day,  which  are  expressly  authorized  to  hold  stock 
in  other  corporations  and  have  been  organized  for  this 
purpose. 

In  all  cases  where  the  corporation  properly  holds  stock 
it  has  all  the  rights  of  a  stockholder  as  to  such  stock,  in- 
cluding the  right  to  receive  dividends  and  to  have  its  rep- 
resentatives vote  and,  when  duly  elected,  act  as  directors 
or  officers  of  the  corporation  by  which  the  stock  was  is- 
sued.^^ 

As  a  rule,  a  corporation  may  buy  its  own  stock  with 
its  surplus  profits,  if  not  prohibited  by  statute  and  all  its 
stockholders  acquiesce. ^^  It  may  not,  however,  do  so 
save  from  surplus  profits — unless  expressly  authorized 
thereto  by  statute — since  such  procedure  impairs  and  prac- 
tically amounts  to  an  illegal  reduction  of  its  capital  stock. 
Transfers  of  stock  held  by  associations,  societies  or 
corporations  must  be  made  under  the  corporate  seal  by 
the  duly  authorized  officers,  and  must  be  accompanied  by 
a  properly  certified  copy  of  the  resolution  or  by-law  author- 
izing the  transfer.  The  certificate  of  authority  should  in- 
clude a  designation  and  statement  of  the  due  election  of 
the  officers  who  are  to  act.  Occasionally  transfer  agents 
or  officers  require  an  exemplified  copy  of  the  minutes  or 

"Booth  V.  Robinson,  55  Md.  419  (1880);  Layng  v.  A.  French  Spring  Co.,  149 
Pa.    St.   308    (1892). 

•oRobotham  v.  Prudential  Ins.  Co.,  53  Atl.  Rep.   (N.  J.)   842  (1903). 

"Camden,  etc.  R.  R.  Co.  v.  Elkins,  37  N.  J.  Eq.  273  (1883);  Rogers  v.  Nash- 
ville, etc.  Ry.  Co.,  91  Fed.  Rep.  299  (1898);  WindmuUer  v.  Standard  Distilling,  etc. 
Co.,  114  Fed.  Rep.  491  (1902);  Oelbermann  v.  New  York,  etc.  R.  Co.,  11  Hun  332 
(1894). 

"  See  1  Cook  on  Corp.,  §  311;  Lowe  v.  Pioneer  Threshing  Co.,  70  Fed.  Rep.  646 
(1895). 


90  STOCK. 

by-laws  of  the  organization  before  they  will  register  such 
a  transfer.    (See  Form  176.) 

When  stock  is  acquired  by  an  association  or  society 
not  incorporated,  it  is  usually  placed  in  the  hands  of  trus- 
tees. 

When  stock  of  another  corporation  is  acquired  by  a 
corporation  authorized  to  hold  such  stock  the  assignment 
may  run  direct  to  the  corporation  or  to  its  treasurer  or  to 
a  trustee  for  the  corporation  (See  §  39),  though  if  the 
stock  actually  and  unreservedly  belongs  to  the  corpora- 
tion, there  is  no  reason  why  it  should  not  be  held  in  the 
corporate  name.  The  certificates  for  such  stock,  assigned 
in  blank  or  assigned  direct  to  the  corporation — or  the 
treasurer  or  a  trustee  if  desired — are  turned  over  to  the 
treasurer  or  other  designated  officer  of  the  transferee  cor- 
poration, who  presents  the  certificates  for  reissue.,  the  new 
certificates  being  taken  in  the  name  of  the  transferee  as 
indicated  by  the  completed  assignments  on  the  back  of  the 
certificates. 

When  such  stock  is  held  in  the  corporate  name  and  is 
to  be  transferred,  the  corporate  signature  is  affixed  to  the 
assignment  by  the  duly  authorized  officer  or  officers  of  the 
assigning  corporation.  The  corporation  which  issued  the 
stock,  before  registering  the  transfer  on  its  books  may  and 
should  require  proper  evidence  that  these  officers  were 
properly  empowered  to  affix  the  corporate  signature. 
This  proof  is  best  supplied  in  the  form  of  a  certified  copy 
of  the  resolution  whereby  the  transfer  of  the  stock  was 
authorized. 

The  procedure  is  much  the  same  where  stock  is  held 
in  the  name  of  the  treasurer  or  a  trustee  for  the  corpora- 
tion, save  as  to  the  signature  to  the  assignment. 

§  56.     Transfers  to  and  by  Partnerships. 

A  partnership  may  deal  in  stocks  as  freely  as  may  in- 


RULES  REGULATING  TRANSFERS.  91 

dividuals,  and  if  it  is  a  trading  partnership,  i.  e.  a  part- 
nership formed  for  the  purpose  of  buying,  selling  or  man- 
ufacturing," any  member  of  the  firm  may  sign  the  part- 
nership name  to  a  transfer  of  stock  if  this  stock  is  held  in 
the  firm  name.^"* 

The  signatures  of  the  individual  partners  to  the  assign- 
ment is  not  necessary,  the  firm  name  affixed  by  one  of  the 
partners  being  legally  sufficient.  The  corporation  may  re- 
quire evidence  when  necessary  of  the  assigning  partner's 
membership  in  the  firm. 

If  stock  is  issued  to  the  partners  as  individuals,  as  "To 
John  Gray  and  Henry  H.  Harriman  "  they  are  tenants  in 
common  and  both  the  individuals  named  must  join  in  any 
transfer.  The  same  is  true  when  the  stock  is  held  in  the 
firm  name  if  the  partnership  is  not  a  trading  partnership. 
Thus  if  stock  is  held  by  a  professional  firm,  even  though 
in  the  firm  name,  the  partners  must  sign  their  individual 
names  to  the  transfer.  In  the  absence  of  objection,  any 
partner  may  vote  on  stock  held  in  the  firm  name  but  in 
case  of  disagreement  the  stock  cannot  be  voted.^^ 

One  joint  owner  cannot  sell  or  vote  stock  standing  in 
the  names  of  two  or  more,  but  each  name  must  be  signed 
to  its  assignment  or  proxy.^^ 

§  57.     Summary  of  Rules  Regulating  Transfers. 

The  following  rules  regulating  transfers  of  stock  are 
those  recognized  by  the  trust  companies  of  New  York 
City  and  are  given  here  as  a  very  clear,  concise  summary 
of  the  general  laws  governing  the  subject. 

(i)  The  assignment  of  a  certificate  should  be  executed 
by  the  stockholder  personally  or  by  duly  authorized  at- 
torney.    In  the  latter  case  the  assigned  certificate  should 

"Lee  V.  Bank,  45  Kan.  8  (1890);  11  L.  R.  A.  238. 

"  Moynahan  v.  Prentiss,  10  Colo.  App.  295  (1897);  Comstock  v.  Buchanan.  57 
Barb.   127   (1864). 

"Matter  of  Pioneer  Paper  Co.,  36  How.  Pr.  Ill  (1865);  Comstock  v.  Buchanan. 
57  Barb.   127    (1864). 

"Tunis  V.  R.  R.  Co.,  149  Pa.  St.  70  (1892);  S.  C,  15  L.  R.  A.  665. 


92  STOCK. 

be  presented  to  the  transfer  officials  accompanied  by  the 
power  of  attorney  under  which  the  party  acts,  and  the 
original  or  a  notarial  copy  of  this  power  should  be  left 
on  file.  Authority  to  transfer  stock  should  appear  in  the 
power  of  attorney  and,  if  necessary,  the  authenticity  of 
the  signature  and  the  fact  that  the  instrument  is  still  in 
force,  must  be  proved. 

(2)  The  signature  must  be  witnessed  and  must  cor- 
respond with  the  name  as  written  on  the  face  of  the  cer- 
tificate. Signatures  unknown  to  the  transfer  agent  should 
be  guaranteed  by  some  bank  official  or  acknowledged  be- 
fore a  notary  public. 

(3)  The  name  and  full  post-office  address  of  the  trans- 
feree should  be  given  in  full  without  abbreviation  of  any 
kind.  The  space  for  the  name  of  the  attorney  should  be 
left  blank.  (The  address  of  the  transferee  is  not  entered 
in  the  assignment  form  but  may  be  noted  on  the  certificate 
or  be  furnished  on  a  slip  attached  to  the  certificate.) 

(4)  The  full  first  name  of  the  transferee  should  be 
given.  If  the  transferee  is  a  woman,  the  prefix  "Mrs." 
or  "Miss"  should  be  used.  No  other  prefixes  and  no  suf- 
fixes should  be  used. 

(5)  In  transferring  to  a  married  woman,  use  her  full 
Christian  name — not  that  of  her  husband. 

(6)  In  case  a  new  certificate  is  required  because  of 
change  of  name  by  marriage,  the  old  certificate  should  be 
signed  "(Mrs.)  Henrietta  F.  Bowen,  formerly  (Miss)  Hen- 
rietta F.  Francisco,"  while  in  the  space  for  the  name  of 
transferee  should  be  placed  the  name  "(Mrs.)  Henrietta  F. 
Bowen." 

(7)  Agents,  attorneys,  executors,  administrators, 
guardians  or  trustees  should  not  transfer  stock  to  them- 
selves directly,  i.  e.  as  individuals. 

(8)  Transfers  to  a  minor  should  give  the  guardian's 
name;  thus,  "Frederick  McAllison  (a  minor)  under  guar- 


RUIvES  REGULATING  TRANSFERS.  93 

dianship  of  John  J.  McCall."  Transfers  to  minors  should 
be  avoided  if  possible.  Transfers  from  a  minor  can  be 
made  only  by  a  guardian  appointed  by  the  proper  court, 
who  must  exhibit  a  duly  certified  copy  of  appointment. 

(9)  A  transfer  by  an  administrator  must  be  within 
his  authority  as  evidenced  by  a  copy  of  his  appointment 
certified  by  the  proper  probate  authorities. 

(10)  A  transfer  by  an  executor  must  be  accompanied 
by  a  copy  of  the  will  and  certificate  of  appointment,  both 
certified  by  the  proper  probate  authorities.  The  copy  of 
the  will  is  returned  after  inspection  by  transfer  agent. 

(11)  Transfers  should  not  be  made  to  a  trustee,  agent 
or  attorney  who  is  not  appointed  by  an  instrument  in  writ- 
ing. If  properly  appointed,  the  transfer  must  describe  the 
trust  by  reference  to  the  will  or  other  instrument  under 
which  it  is  created. 

(12)  In  transfers  by  trustees — when  more  than  one — 
all  must  sign  and  the  transfer  must  be  accompanied  by  a 
properly  certified  copy  of  the  instrument  which  authorizes 
the  trustees  to  sell  or  transfer  such  stock. 

(13)  In  transferring  to  a  society  or  institution,  evi- 
dence should  be  required,  if  necessary,  that  it  has  power 
to  hold  and  transfer  stock. 

(14)  Transfers  by  associations  societies  or  corpora- 
tions must  be  executed  by  duly  authorized  officers  under 
seal  of  the  organization,  and  must  be  accompanied  by  a 
certified  copy  of  the  authorizing  resolution  or  by-law. 


The  regulations  also  prescribe  generally  that  prompt 
notice  of  any  change  of  address  of  a  stockholder,  stating 
the  company  in  which  the  stock  is  held,  should  be  sent  to 
the  transfer  agent  for  record,  and  that  lost  certificates 
should  be  reported  to  the  transfer  agent  as  soon  as  the  loss 
is  discovered,  with  full  description  of  the  missing  cer- 
tificate. The  number  of  the  certificate,  name  in  which  it 
is  issued,  and  number  of  shares  of  stock  are  usually  suffi- 
cient description. 


PART   III.— STOCKHOLDERS. 


CHAPTER  VIII. 
RIGHTS  AND  POWERS  OF  STOCKHOLDERS. 


(a)  Rights  of  Stockholders. 

§  58.     Incorporators,  Subscribers  and  Stockholders. 

An  "incorporator"  is  one  of  those  to  whom  a  charter  is 
granted.  As  ordinarily  employed,  the  term  is  restricted 
to  those  whose  signatures  appear  on  an  allowed  charter 
application. 

A  "subscriber"  is  one  who  subscribes  for  one  or  more 
shares  of  stock  of  a  corporation,  either  before  or  after  or- 
ganization, while  a  "stockholder"  or  "shareholder"  is  one 
who  holds  stock  in  a  corporation.  The  acceptance  of  a 
subscription  is  sufficient  to  constitute  the  subscriber  a 
stockholder. 

In  most  of  the  states  the  incorporators  must  have  sub- 
scribed for  stock  in  the  proposed  corporation,  their  sub- 
scriptions appearing  in  the  charter  application.  Then  un- 
til the  allowance  of  the  charter  they  are  subscribers,  but 
as  soon  as  the  charter  is  granted  become  incorporators 
and — the  allowance  of  charter  acting  as  an  acceptance  of 
their  subscriptions — stockholders  as  well.  (See  §  30.)  In 
some  states,  however,  the  incorporators  may  organize  the 
corporation  without  subscribing  for  stock  and  without  any 
permanent  connection  with  the  company. 

Subscribers  to  stock  whose  subscriptions  are  not  in- 
cluded in  the  charter  are  not  incorporators  even  though 

94 


RIGHTS  AND  POWERS  O^  STOCKHOUDERS.  95 

they  subscribe  prior  to  incorporation,  nor  are  their  sub- 
scriptions effective,  nor  are  they  entitled  by  reason  of 
their  subscriptions  to  take  part  in  the  organization  meet- 
ing until  their  subscriptions  have  been  accepted  in  some 
way  by  the  corporation.  (See  §  30.)  As  soon,  however, 
as  a  subscription  is  accepted  by  the  corporation,  the  sub- 
scriber becomes  a  stockholder  with  all  the  usual  rights 
and  powers,  regardless  of  whether  he  has  paid  for  his 
stock.^  He  may  in  fact  pay  nothing  on  his  stock  and  never 
receive  a  stock  certificate,  but  nevertheless  remains  a 
stockholder  until  he  transfers  his  stock  or  it  has  been  for- 
feited by  proper  legal  procedure.^     (See  §§  31-33,  36.) 

§  59.     Rights  of  Stockholders. 

The  rights  of  stockholders  discussed  in  the  present 
chapter  are  those  general  rights  which  are  incident  to  the 
ownership  of  common  stock  in  a  stock  corporation.  The 
holders  of  preferred  stock  have  all  these  same  rights — in 
addition  to  their  special  rights — unless  denied,  varied  or 
restricted  by  the  terms  of  issue. 

As  already  stated,  every  stockholder  has  the  right  to 
transfer  stock  freely  (See  §  43),  to  have  his  name  appear 
as  that  of  a  stockholder  upon  the  stock  books  of  the  com- 
pany (See  §  35)  and  when  his  stock  is  full-paid,  to  have  a 
stock  certificate,  (See  §  31.)  In  addition,  the  individual 
rights  of  a  holder  of  stock  are, — 

1.  To  be  notified  of  and  participate  in  all  stock- 
holders' meetings  in  person  or  by  proxy,  and  usu- 
ally for  each  share  of  stock  standing  in  his  name 
upon  the  books  of  the  corporation  to  cast  one  vote 
at  any  election  of  directors  or  upon  any  question 
that  may  come  before  such  meeting. 

2.  To   share,   in   proportion   to   the   amount   of 

»  Peninsular  Ry.  Co.  v.  Duncan,  28  Mich.  130  (1873);  State  v.  Ferris,  42  Conn. 
560   (1875). 

» Wheeler  v.   Millar,  90  N.  Y.   353   (1882). 


96  STOCKHOLDEJRS. 

Stock  owned,  in  all  dividends  declared  on  the  com- 
mon stock,  and  to  subscribe  in  like  proportion  for 
any  increase  of  the  capital  stock. 

3.  In  event  of  the  dissolution  of  the  corporation, 
to  share  in  proportion  to  the  amount  of  stock  ovvmed 
in  any  assets  remaining  after  the  corporate  debts 
and  obligations  have  been  paid. 

4.  To  inspect  the  corporate  books  and  accounts. 

These  rights  are  discussed  in  detail  in  the  sections 
which  follow. 

§  60.     (i)  Voting. 

Unless  expressly  denied  in  some  way,  every  stock- 
holder, whether  his  stock  be  common,  preferred  or  special, 
has  the  right  to  participate  in  and  vote  at  all  meetings  of 
stockholders.  (See  §§  90,  91.)  Usually  he  is  entitled  to 
cast  one  vote  on  all  matters  passed  upon  at  stockholders' 
meetings  for  each  share  of  stock  standing  in  his  name  upon 
the  books  of  the  corporation, — a  right  secured  to  him  in 
a  majority  of  the  states  by  express  statute  provision.  In 
other  states  the  right,  if  desired,  should  be  definitely  set 
forth  and  secured  by  proper  provision  in  the  charter  or 
by-laws.  If  this  is  not  done,  the  common  law  prevails, 
under  which  every  stockholder  is  entitled  to  one  vote  on 
all  matters  passed  upon  by  the  stockholders,  regardless 
of  the  amount  of  stock  he  holds. ^ 

If  the  statutes  make  no  provision  as  to  voting,  the  mat- 
ter may  be  regulated  by  either  charter  or  by-laws.  In 
some  few  states,  as  in  Washington  and  Maine,  the  statutes 
expressly  authorize  such  regulation  by  the  by-laws.  In 
others,  as  in  Connecticut,  Delaware,  New  Jersey  and 
Nevada,  the  statutes  provide  the  method  that  shall  be  fol- 
lowed in  voting  unless  otherwise  prescribed  by  charter  or 
by-laws. 

•Commonwealth  v.  Dalzell,  152  Pa.  St.  217   (1893);  Taylor  v.  Griswold,   14  N.   T. 
L.   222    (1834). 


RIGHTS  AND  POWERS  OF  STOCKHOLDERS.  97 

The  Statutes  usually  prescribe  that  voting  at  elections 
of  directors  shall  be  by  ballot.  Where  no  special  method 
of  voting  is  prescribed  by  statutes,  charter  or  by-laws,  it 
may  be  by  call  of  roll,  by  ballot,  or  by  any  other  method 
that  will  properly  and  legally  indicate  the  sense  of  the 
meeting.  If  all  are  agreed,  it  is  always  permissible  to  in- 
struct the  secretary  to  cast  the  single  ballot  of  the  meet- 
ing for  the  election  of  specified  candidates  for  directors, 
or  for  or  against  any  other  measure  properly  before  the 
meeting. 

As  between  the  corporation  and  its  members,  the  right 
to  vote  and  usually  also  the  number  of  votes  a  stockholder 
is  entitled  to  cast  is  determined  by  the  stock  books  of  the 
corporation."*  The  possession  or  non-possession  of  a  stock 
certificate  is  immaterial.     (See  §§  31,  33,  34,  36,  91.) 

The  right  to  vote  by  proxy  is  generally  given  by  express 
provision  of  either  the  statutes  or  by-laws,  though  in  some 
states  the  right  is  secured  by  constitutional  provision.  It 
did  not  exist  at  common  law.^     (See  §  85.) 

Trustees  may  vote  upon  the  stock  held  in  their  names 
as  trustees.  An  executor  or  administrator  may  vote  upon 
the  stock  belonging  to  the  estate  even  though  standing  in 
the  name  of  the  deceased  party.  In  the  absence  of  dis- 
agreement, any  partner  may  vote  stock  standing  in  the 
partnership  name.  A  corporation  holding  stock  of  an- 
other corporation  may  vote  such  stock  through  duly  au- 
thorized agents.  A  receiver  usually  votes  stock  in  his 
possession.  When  stock  is  held  jointly  or  in  common,  as 
in  the  case  of  a  partnership  or  where  there  are  two  or 
more  trustees  or  executors,  all  must  agree  on  the  vote  or 
otherwise  it  will  be  lost.^ 

The  right  to  vote  carries  with  it  the  right  to  be  notified 

♦Commonwealth  v.  Dalzell,  152  Pa.  St.  217  (1893);  State  v.  Ferris,  42  Conn.  560 
(1875);  In  re  Argus  Printing  Co.,  1   N.  D.  434   (1891). 

•Taylor  v.  Griswold,  14  N.  J.  L.  222  (1834);  Philips  v.  Wickham,  1  Paige  (N. 
Y.)  590  (1829):  Commonwealth  v.  Bringhurst,  103   Pa.   St.   134   (1883). 

•Tunis  V.  Hestonville,  etc.  Co.,  149  Pa.  St.  70  (1892);  Hey  v.  Dolphin,  92  Hun 
(N.  Y.)   230   (1895). 


98  STOCKHOI.DERS. 

of  all  special  meetings/  and  of  all  regular  meetings  if  so 
prescribed.     (See  §§  80,  97.) 

§  61.     (2)  Dividends  and  Participation  Rights. 

Save  when  affected  by  the  issue  of  some  preferred  or 
other  special  stock,  each  stockholder  has  the  right  to  share 
in  dividends  with  the  other  stockholders  of  his  corpora- 
tion proportionately  to  the  number  of  shares  of  stock  he 
holds,  and  there  must  be  no  discrimination  of  any  kind  in 
the  declaration  or  the  payment  of  these  dividends.  (See 
§  §  169,  171.) 

Holders  of  preferred  stock,  unless  otherwise  expressly 
provided,  are  entitled  in  any  year  to  payment  of  their  pre- 
ferred dividends  before  any  dividends  are  paid  the  com- 
mon stock,  and  thereafter,  as  soon  as  the  common  stock 
has  received  an  equal  dividend,  to  participate  equally  with 
the  common  stock  in  any  further  dividends  declared  in 
that  year.^ 

If  the  capital  stock  of  a  corporation  is  increased,  each 
stockholder  has  the  right  to  subscribe  for  the  new  stock 
proportionately  to  his  holdmg  of  the  old  outstanding 
stock. ^  Thus  if  he  holds  ten  per  cent,  of  the  outstanding 
stock  and  the  capital  stock  is  increased,  he  has  the  privi- 
lege of  subscribing  for  ten  per  cent,  of  the  new  stock. 
This  rule  applies  to  any  actual  increase  of  stock,  but  not 
to  a  sale  of  treasury  stock,  nor  usually  to  stock  which  is 
part  of  the  original  capitalization  but  which  has  not  yet 
been  issued. ^^  If,  however,  this  unissued  stock  has  been 
held  for  a  considerable  period  of  time  and  is  then  issued, 
the  stockholders  should  all  have  an  equal  opportunity  to 
subscribe  therefor.^^     Holders  of  preferred  stock  have  the 

T  People  V.  ■Hatchelor,  22  N.  Y.  128  (1860);  Tn  re  St.  Helen  Mill  Co.,  3  Sawy. 
88   (]874>:  Wigfifin  v.   First,  etc.   Church.  8  Mete.    (Mass.)    301    (1844). 

»  Rnardman  v.  Lake  Shore,  etc.   R.   R.   Co.,   84   N.    Y".   157    (1881). 

»  ^''av  V.  .\m.  Orenpe  Co..  60  N.  T.  Fq.  ?63  (1900):  Electric  Co.  v.  Edison,  etc. 
Co.,  200  Pa.  St.  S\6  (1901):  Stokes  v.Cont.  Trust  Co.,  185  N.  Y.  285   (1906). 

"Crosby  v.  Stratton.  68  Pac.  Rep.  130  (1902);  State  v.  Smith,  48  Vt.  266  (1876), 

"  Electric  Co.  v.  Edison  El.   Co.,  200  Pa.   St.  516   (1901). 


RIGHTS  AND  POWERS  OF  STOCKHOLDERS.  99 

same  rights  of  subscription  as  do  holders  of  common  stock, 
unless  expressly  denied  them  by  the  provisions  which  cre- 
ated the  preferred  stock. 

The  right  of  subscription  is  sometimes  of  considerable 
value  as  where  a  new  issue  of  stock  is  authorized  at  a  fixed 
price  and  this  price  advances  before  the  day  of  sale 

§  62.     (3)  Distribution  of  Assets  on  Dissolution. 

Each  stockholder  is  entitled  to  share  equally  in  any  dis- 
tribution of  the  assets  of  the  corporation,  whether  on  final 
distribution  or  on  some  partial  intermediate  distribution. 
Under  whatever  proceedings  a  corporation  is  dissolved, 
the  general  rule  holds  that  all  corporate  obligations  and 
the  expenses  of  the  proceedings  mast  first  be  discharged, 
and  that  any  remaining  assets  must  be  distributed  among 
the  stockholders,  the  same  rules  applying  as  to  equality  of 
payment,  of  time  and  of  kind,  as  in  the  case  of  dividends. ^^ 
(See  §  179.) 

In  the  absence  of  any  express  provision  to  the  contrary, 
common  and  preferred  stock  share  alike  in  the  distribution 
of  assets. ^^  If  by  its  terms  preferred  stock  takes  prece- 
dence, it  must  first  receive  any  assets  available  for  distri- 
bution up  to  its  full  face  value.  The  common  stock  then 
receives  any  remaining  assets  up  to  its  full  face  value. 
If  any  balance  of  assets  still  remains,  both  common  and 
preferred  stock  participate  therein  alike,  unless  otherwise 
expressly  provided. 

§  63.     (4)  Inspection  of  Books. 

Under  the  common  law  every  stockholder  had  the  right 
to  inspect  the  books  and  accounts  of  the  corporation  in 
person  or  by  agent  and  to  make  abstracts  or  copies  there- 
from without  restriction,   save   that  the   examination  be 

"Mason  v.  Pewabic  Min.  Co.,  133  U.  S.  SO  (1889);  2  Cook  on  Corp.,  §  641. 
"  Coltrane  v.   Building  Assn.,   110   Fed.   Kep.   281    (1901);   McGregor  v.   Ins.   Co., 
33  N.  J.  Eq.  181    (1880). 


100  STOCKHOI^DERS. 

made  at  a  reasonable  time  and  for  a  proper  purpose.  By 
modern  statutory  regulations  and  judicial  decisions,  the 
right  has  been  much  curtailed,^''  until  it  is  now  in  many 
states  but  little  more  than  nominal. 

In  these  states  a  stockholder  desiring  to  examine  the 
books  of  account  or  the  records  of  his  corporation  must,  if 
refused,  secure  an  order  of  court  for  such  examination, 
which  will  only  be  granted  when  he  shows  some  good  rea- 
son therefor.^^  This  reason  must  be  substantial  and  must 
be  for  the  specific  purpose  of  investigating  some  matter 
concerning  the  management  of  the  corporation  in  which 
his  rights  as  a  stockholder  are  or  may  be  affected  in- 
juriously.^^ 

This  restriction  of  the  right  is  not  unreasonable.  It 
is  obvious  that  it  would  be  impracticable  in  a  large  modern 
corporation  with  its  multitude  of  scattered  stockholders, 
to  allow  these  to  come  in  at  any  time  and  make  an  exam- 
ination of  the  books.  The  interference  with  the  regular 
business  would  in  itself  be  intolerable,  but  beyond  this  the 
right  might  be  so  used  in  the  interest  of  business  com- 
petitors as  to  render  it  destructive  of  the  interests  of  the 
stockholders  at  large. 

In  some  states  statutes  have  been  passed  which  some- 
what enlarge  the  stockholders'  usual  right  to  examine  the 
corporate  records,  and  in  a  few  states  the  right  has  been 
considerably  extended.  In  most  of  the  states  there  is  a 
statutory  right  to  inspect  the  stock  and  transfer  books, ^' 
though  in  New  Jersey  the  courts  hold  that  even  this  right 
cannot  be  enforced  unless  the  stockholder  can  show  some 
reason  for  his  inspection  "germane  to  his  status  as  a  stock- 

"  Raneer  v.  Champion  Cotton  Press  Co.,  51  Fed.  61  (1892);  Chable  v.  Nicaragua 
Canal  Construction  Co.,  59  Fed.  846  (1894->;  Hiivlar  v.  Cratrin  Cattle  Co.,  40  N.  J. 
Eq.  392  (1895):  People  v.  Fadie,  63  Hun.  320:  AfF'd,  133  N.  Y.  573  (1892);  Matter  of 
Steinwav.  159  N.  Y.  250  (1899);  Cincinnati  Volksblatt  Co.  v.  Hoffmeister,  62  O.  St. 
189   (1900). 

"  Pnine  V.  Warren.  33  Fed.  Ren.  357  0  888):  Rancer  v.  ChaTrinJon  Cotton  Press 
Co..  51  Fed.  Rep.  61  (1892):  Varnev  v.  Baker,  194  Mass.  239  (1907);  Kuhbach  v. 
IrviniT.   etc.    Co..   220   Pa.    St.   427   (1908). 

"Phoenix  Iron  Co.  v.  Commonwealth.  113  Pa.  St.  563  (1886);  Sage  v.  Lake 
Shore,  etc.  R.  R.  Co.,  70  N.  Y.  220   (1877). 

"lyozier  v.  Saratoga,  etc.  Co.,  59  App.  Div.  (N.  V.)  390  (1901);  Lewis  v.  Brain- 
erd,  53  Vt.   519   (1881). 


RIGHTS  AND  POWERS  OF  STOCKHOLDERS.  101 

holder."^^  In  many  of  the  states  a  statutory  penalty  is 
imposed  on  the  corporate  officers  who  refuse  a  stockholder 
the  right  of  inspection  prescribed  by  the  statutes.  In  such 
cases  the  stockholders'  rights  are  not  difficult  of  enforce- 
ment.^^ 

Where  the  right  to  examine  the  corporate  records  ex- 
ists, it  includes  the  right  to  make  copies  and  abstracts.^" 
It  also  includes  the  right  to  be  accompanied  by  the  party's 
attorney  or  expert  accountant,  or  the  inspection  may  be 
delegated  to  one  or  both  of  these.'^^ 

§  64.     Special  Charter  Rights. 

In  many  states  special  provisions  "for  the  regulation 
of  the  business  and  the  conduct  of  the  affairs  of  the  cor- 
poration" may  be  inserted  in  the  corporate  charter. 
Where  this  privilege  exists,  rights  not  usually  belonging 
to  the  stockholders  of  a  corporation  may  be  thereby  se- 
cured. Thus,  stock  may  be  classified  so  as  to  give  the 
minority  stockholders  unusual  voting  powers;  minority 
representation  may  be  insured  by  cumulative  voting;  the 
right  to  examine  books  may  be  defined  and  extended;  the 
right  to  be  present  at  directors'  meetings  may  be  given; 
it  may  be  provided  that  profits  when  they  exist  shall  be 
declared  as  dividends  at  regular  intervals,  or  the  power 
of  the  directors  to  pay  salaries,  contract  debts,  sell  cor- 
porate property,  and  the  like,  may  be  restricted. 

It  should  be  noted  that  special  provisions  incorporated 
in  the  charter  are  difficult  of  repeal  or  amendment.  For 
this  reason  only  those  which  are  expressly  desired  to  be 
permanent  should  be  made  the  subject  of  charter  pro- 
vision.    Less  important  provisions  are  better  included  in 

"State  V.  National  Biscuit  Co.,  54  Atl.  241    (1903). 

"Lozier  v.  Saratoga,  etc.  Co.,  59  App.  Div.  (N.  Y.)  390  (1901);  Lewis  v. 
Brainerd,   S3   Vt.   519    (1881). 

»»  Cincinnati  Volksblatt  Co.  v.  Hoffmeister,  62  O.  St.  189  (1900);  Martin  v.  W. 
J.  Johnston  Co.,  62  Hun  557  (1891);  Contra  Commonwealth  v.  Empire,  etc.  Ry.  Co., 
134   Pa.   St.   237    (1890). 

"People  V.  Nassau  Ferry  Co.,  86  Hun  128  (1895);  Foster  v.  White,  86  Ala.  467 
(1888);  Ellsworth  v.  Uorwart,  95  Iowa  108   (1895). 


102  STOCKHOLDERS. 

the  by-laws,  where  they  may  be  changed  when  necessary 
with  less  formality. 

§  65.     Statutory  Rights. 

In  most  of  the  states  the  usual  common  law  rights  of 
stockholders — discussed  in  the  preceding  sections — have 
been  re-enacted  in  the  statutes.  In  many  states  the 
statutes  give  the  stockholders  additional  rights.  Thus,  in 
New  York,  Kansas,  North  Dakota  and  a  number  of  other 
states,  stockholders  may  call  for  prescribed  statements  and 
reports  from  the  corporate  officials.  In  California  and 
Washington  they  may  inspect  mines  owned  by  the  cor- 
poration. In  Connecticut  any  stockholder  may  apply  for 
a  mandamus  to  compel  the  corporation  to  obey  the 
statutes.  In  Delaware  any  stockholder  may  demand  a 
statement  of  amounts  paid  on  capital  stock  and  the  amount 
of  stock  issued.  In  a  number  of  states  meetings  for  elec- 
tion of  directors  may  be  compelled  by  following  prescribed 
procedure.  Provisions  as  to  inspection  of  books  are  com- 
mon and  go  beyond  the  common  law  rights. 

(b)   Powers  of  Stockholders. 

§  66.     Individual  and  Collective  Powers. 

The  individual  stockholder,  no  matter  how  large  his 
holding,  has  no  power  as  a  stockholder  to  interfere  in  the 
lawful  management  of  the  company  or  its  business.^^  If 
the  directors  take,  or  are  about  to  take  any  illegal  or 
wrongful  action,  he  may  restrain  them  by  appeal  to  the 
courts.  If,  however,  the  action  taken  or  about  to  be 
taken  is  in  itself  not  unlawful  but  merely  objectionable  to 
him,  his  only  recourse  is  to  induce,  if  he  can,  a  majority  of 
the  stockholders  to  act  with  him  in  a  duly  assembled 
stockholders'  meeting,  when  the  by-laws  may  be  amended 
or  such  other  remedial  steps  be  taken  as  may  be  possible. 

"Demarest  v.  Spiral,  etc.  Tube  Co.,  71  N.  J.  L.  14  (1904). 


RIGHTS  AND  POWERS  OF  stockhoi:.de;rs.  103 

The  collective  powers  of  the  stockholders  apply  to  but 
few  matters  and  may  be  summarized  as  follows: 


Amendment  of  charter. 

Adoption,  repeal  or  amendment  of  by-laws. 

Election  of  directors. 

Sale  of  entire  assets. 

Dissolution  of  corporation. 

Exercise  of  any  special  charter  powers. 


§  67.     (i)  To  Amend  Charter. 

A  charter  is  a  contract  between  the  state  and  the  stock- 
holders of  the  particular  corporation,  and  the  assent  of 
both  the  state  and  these  stockholders  is  a  prerequisite  to 
its  amendment.  As  the  charter  is  also  a  contract  between 
the  corporation  and  its  stockholders,  the  unanimous  vote 
of  all  the  stockholders  is  required  for  its  amendment  unless 
otherwise  prescribed  by  statute.^ 

In  most  of  the  states  such  statutes  exist  providing  that 
the  charter  may  be  added  to  or  amended,  usually  in  cer- 
tain prescribed  details  or  matters,  by  the  action  of  a  speci- 
fied proportion  of  the  stockholders  ranging  upward  from  a 
bare  majority  to  three-fourths  of  the  outstanding  stock. 
(See  §  12.) 

§  68.     (2)  To  Adopt,  Repeal  or  Amend  By-laws. 

The  adoption  or  amendment  of  by-laws  is  one  of  the 
common  law  powers  of  the  stockholders.  (See  §  §  19,  2^.)  If 
no  provision  is  made  otherwise,  the  power  to  adopt,  amend 
and  repeal  by-laws  rests  with  the  stockholders  alone,^ 
who  must,  to  exercise  this  power,  be  duly  assembled  in  a 
meeting  at  which  such  action  can  be  lawfully  taken. ^  If 
the  charter  or  by-laws  do  not  otherwise  prescribe,  the  by- 
laws may  be  adopted,  amended  or  repealed  at  any  regular 

» Hope,   etc.    Ins.    Co.   v.    Beckmann,   47    Mo.    93    (1870);    Marietta,   etc.    R.    R.   v. 
Elliott,  10  O.  St.  57  (1859);  Mercantile,  etc.  Co.  v.  Kneal,  51  Minn.  263  (1892). 
'  Angel  &  Ames  on  Corp.,  §  327. 
»  North,  etc.  Co.  v.   Bishop,   103  Wis.  492   (1899). 


104  STOCKHOLDERS. 

meeting  of  the  stockholders  or  at  any  special  meeting 
where  such  proposed  action  has  been  duly  announced. 
There  is  some  question  whether  by-laws  may  be  adopted 
or  amended  without  previous  notice  at  the  annual  meeting 
held  in  accordance  with  statutory  requirements,  unless  the 
charter  or  by-laws  expressly  so  provide."* 

If  the  power  to  adopt  by-laws  is  delegated  to  the  direc- 
tors (See  §  119),  this  does  not,  unless  expressly  so  stated, 
confer  on  them  the  exclusive  right  to  make  by-laws  nor 
empower  them  to  repeal  by-laws  enacted  by  the  stock- 
holders.5     (See  Ch.  Ill,  "By-laws.") 

§  69.     (3)  To  Elect  Directors. 

The  election  of  directors  is  one  of  the  common  law 
powers  of  stockholders  which  has  been  re-enacted  in  the 
statutes  of  most  of  the  states.  In  all  corporations  for 
profit  the  power  exists  without  specific  statutory  author- 
ity.^    (See  §  90.) 

In  the  absence  of  other  provision,  the  stockholders 
have  the  right  to  fill  vacancies  in  the  board  of  directors. 
Ordinarily,  however,  either  by  statute  or  by-law  provision 
this  power  is  given  to  the  board.    (See  §  iii.) 

§  70.     (4)  To  Sell  Entire  Assets. 

A  solvent  corporation  can  only  sell  its  entire  assets  by 
the  unanimous  consent  of  all  its  stockholders.^  Where, 
however,  a  corporation  is  financially  involved  or  likely  to 
become  so,  the  sale  of  all  its  property  may  be  made  in  any 
manner  that  will  secure  a  fair  return,  by  authorization  of  a 

«Dill  on  N.  J.  Corp.,  p.  27;  Smith  v.  Nelson,  18  Vt.  511  (1846);  Kent  v. 
Quicksilver  Mining  Co.,  78  N.  Y.  159  (1879);  Bagley  v.  Reno,  etc.  Co.,  201  Pa.  St. 
78   (1902). 

•  Heintzelman  v.  Druids'  Relief  Assoc,  38  Minn.  138  (1888);  Stevens  v.  Davison, 
18  Gratt.  (Va.)  819  (1868);  Commonwealth  v.  Gill,  3  Whart.  (Pa.)  228  (1838); 
Alters  v.  Journeymen,  etc.  Assoc,   19  Pa.   Super.  Ct.  272   (1902). 

*  Re  Union  Ins.  Co.,  22  Wend.  591  (1840);  In  re  Long  Island  R.  R.  Co.,  19 
Wend.   37   (1837). 

'Abbot  V.  American  Hard  Rubber  Co.,  33  Barb.  578  (1861);  People  v.  Ballard, 
134  N.  Y.  269  (1892);  Eldred  v.  American  Palace  Car  Co.,  96  Fed.  Rep.  59  (1899); 
99  Fed.  Rep.  168  (1900). 


RIGHTS  AND  POWERS  OE  STOCKHOLDKRS.  105 

majority  of  the  stockholders.®  Also  if  the  statutes  or 
charter  so  provide,  the  entire  assets  of  a  corporation  may 
be  sold  by  action  of  a  majority  of  the  stockholders,  or  by 
majority  action  of  the  directors,  the  prescribed  formalities 
being  duly  observed.' 

§  71.     (5)  To  Dissolve  the  Corporation. 

"It  is  an  unquestioned  rule  that  all  the  stockholders,  by 
unanimous  consent,  may  effect  a  dissolution  of  the  cor- 
poration by  the  surrender  of  the  corporate  franchises."^" 
Where  the  corporation  is  insolvent  or  is  in  danger  of  be- 
coming insolvent,  and  is  unable  to  further  conduct  its  cor- 
porate business,  a  majority  of  the  stockholders  may  effect 
its  dissolution.  This  is  the  extent  of  the  povvrer  of  the 
stockholders  under  the  common  law.^^ 

Statutory  provisions,  however,  exist  in  a  majority  of 
the  states  prescribing  procedure  M^hereby  dissolution  may 
be  had  by  action  of  a  stated  majority  of  the  stockholders. 
(See  §  179.) 

§  72.     (6)  Special  Powers. 

In  many  states  special  powers  are  conferred  upon  the 
stockholders  by  express  statutory  provision.  Thus  in 
Kentucky,  Maine  and  some  other  states,  it  is  provided  that 
corporations  may  merge  or  consolidate  with  others  upon 
the  consent  of  a  prescribed  majority  of  the  outstanding 
stock,  usually  with  a  provision  for  the  appraisement  and 
purchase  of  the  stock  of  any  dissenting  stockholder.  In 
New  York,  Pennsylvania  and  some  other  states  it  is  pro- 
vided that  any  mortgage  of  corporate  property  must  be 

•Sewell  V.  East,  etc.  Co.,  50  N.  J.  Eq.  717  (1893);  Skinner  v.  Smith,  134  N.  Y. 
240   (1892);  Hayden  v.  Official  Hotel  Red-Hook,  etc.   Co.,  42   Fed.  Rep.  875    (1890). 

•Republican,  etc.  Mines  v.  Brown,  58  Fed.  Rop.  644  (1893);  St.  Louis  v.  St. 
Louis,  etc.  Co.,  70  Mo.  69  (1879);  Peabody  v.  Westerly  Waterworks,  20  R.  I.  176 
(1897);  Mumford  v.  Ecuador,  etc.   Co.,   Ill    Fed.  Rep.  639   (1901). 

"2  Cook  on  Corp.,  §  629;  Denike  v.  N.  Y.,  etc.  Co.,  80  N.  Y.  599  (1880);  Hous- 
ton V.  Jefferson  College,  63  Pa.  St.  428  (1869). 

'•Berry  v.  Broach,  65  Miss.  450  (1888);  Price  v.  Holcomb,  89  Iowa  123  (1893). 


106  STOCKHOLDERS. 

authorized  by  a  vote  of  the  stockholders.  In  several 
states,  as  California  and  Montana,  directors  may  be  re- 
moved by  a  two-thirds  vote  of  the  entire  stock.  In  the 
states  where  special  provisions  may  be  inserted  in  the  char- 
ter, as  in  New  York,  Delaware  and  South  Dakota,  it  is 
possible  to  extend  the  powers  of  stockholders  far  beyond 
their  usual  scope.     (See  §§  14,  64.) 


CHAPTER  IX. 
LIABILITIES    OF   STOCKHOLDERS. 


§  73.     Liabilities  of  Subscribers  to  Stock. 

"The  public,  in  dealing  with  a  corporation,  assumes 
that  its  actual  capital  in  money  or  money's  worth,  is  equal 
to  the  capital  stock  which  it  purports  to  have,  unless  it  is 
impaired  by  business  losses,"^  and  those  who  credit  the 
corporation  have  a  right  to  assume  that  if  this  is  not  the 
case,  any  difference  between  the  amount  of  capital  actually 
paid  in  and  the  par  value  of  its  issued  stock  will  be  made 
up  as  far  as  necessary  to  meet  corporate  liabilities.  In 
other  words,  those  dealing  with  a  corporation  are  justified 
in  assuming  that  a  dollar's  worth  of  cash  or  property  has 
been  contributed  to  the  corporation,  or  will  be  contributed 
if  the  necessity  arises,  for  every  dollar  of  its  stock  out- 
standing. This  is  a  broad  statement  of  the  claim  which 
corporate  creditors  have  upon  stockholders. 

While  the  assumption  on  the  part  of  the  public  of  the 
value  represented  by  stock  has  often  but  little  basis  in 
fact,  it  is  the  foundation  for  the  common  law  liability  of 
the  subscriber,  first  to  the  corporation  and  then  to  the 
creditors  of  the  corporation,  for  any  amount  unpaid  on  his 
subscription.^  If  subscriptions  are  not  paid  according  to 
their  terms,  or  when  subscriptions  are  unconditional  as 
calls  are  made  by  the  directors,  the  corporation  may  either 
bring  suit  to  collect  unpaid  amounts,  obtain  judgment  and 

»  1   Cook  on  Corp.,  §199. 

•  Hollins  V.  Brierfield,  etc.  Co.,  ISO  U.  S.  371   (1893). 

107 


108  STOCKHOLDERS. 

levy  on  the  stock  if  necessary,^  or,  where  the  statutes  give 
such  pow^er,  may  forfeit  the  delinquent  stock.  If  the  cor- 
poration does  neither,  tlie  liability  of  the  stockholder  on 
his  unpaid  stock  still  remains  for  the  benefit  of  creditors 
of  the  corporation.     (As  to  transfers  of  unpaid  stock,  see 

§§  48,  74-) 

When  the  statutory  forfeiture  of  stock  for  unpaid  calls 
is  enforced  in  good  faith,  a  stockholder  who  is  thus  de- 
prived of  his  stock  is  released  from  further  liability  to  the 
corporation  and  its  creditors."*  When  stock  is  so  forfeited, 
it  is  necessary  to  observe  the  prescribed  statutory  formali- 
ties carefully,  as  otherwise  the  proceedings  may  be  set 
aside  and  the  corporation  be  liable  in  damages.^ 

An  important  difference  must  be  noted  here  between 
the  stockholder's  liability  to  the  corporation  and  to  the 
corporate  creditors.  The  corporation  may,  if  it  desires, 
sell  stock  to  subscribers  at  less  than  par,  and,  if  it  does  so 
with  the  agreement  that  such  payment  shall  be  payment  in 
full,  the  agreement  will  stand  as  to  the  corporation,  and, 
upon  payment  of  the  agreed  amount,  the  subscriber's  ob- 
ligations to  the  corporation  are  at  an  end.  The  corporate 
creditors,  however,  who  are  not  parties  to  the  agreement, 
are  not  estopped  thereby  but  may  proceed  against  the 
stockholder  for  the  difference  between  the  amount  he  has 
paid  on  his  stock  and  its  full  par  value,  and  the  agreement 
with  the  corporation  is  no  defense. 

As  a  rule,  corporate  creditors  must  first  proceed  against 
the  corporation  for  the  collection  of  their  claims.  If  they 
secure  judgment  against  the  corporation  and  are  unable 
to  collect  from  it,  they  may  then  proceed  against  any 
stockholder  who  has  not  paid  in  full  for  his  stock. ^  If, 
however,   the   corporation   has  been   dissolved  or   is   no- 

•  Nashua  Bank  v.  Anglo-Am.  Co.,  189  U.  S.  221  (1903);  Upton  v.  Tribilcock,  91 
U.    S.    45    (1875). 

*  Mills  V.  Stewart,  41  N.  Y.  384  (1869);  Germantown,  etc.  Co.  v.  Fitler,  60  Pa. 
St.   124   (1869). 

•Lewey's  Island  R.  R.   Co.  v.  Bolton,  48  Me.  451   (1860). 
•Wetherbee  v.  Baker,  35  N.  J.  Eq.  501   (1882). 


UABILITIES  OF  STOCKHOIvDERS,  109 

toriously  insolvent,  creditors  may  proceed  directly  against 
the  stockholders  of  the  corporation/  If  the  corporation 
goes  into  the  hands  of  an  assignee,  a  receiver,  or  a  trustee 
in  bankruptcy,  it  is  the  duty  of  that  official  to  collect  all 
unpaid  subscriptions.^ 

The  fact  that  other  stockholders  have  not  paid  their 
subscriptions  does  not  avail  a  stockholder  as  a  defense 
against  payment  of  his  own  subscription.  Nor  has  he  any 
claim  against  these  other  subscribers.  When,  however, 
payment  of  his  subscription  is  enforced  by  corporate  credi- 
tors, the  conditions  are  different.  A  corporate  creditor 
need  not,  as  a  rule,  proceed  against  or  join  all  the  stock- 
holders whose  subscriptions  are  unpaid  but  may  collect 
from  any  one  or  more  of  them  up  to  the  full  amount  due 
on  their  stock  if  his  claim  amounts  to  so  much.  In  such 
case,  as  the  corporate  debts  are  a  joint  obligation  to  be 
borne  by  all  the  delinquent  stockholders  in  proportion  to 
the  amounts  due  on  their  stock,  any  subscribers  who  are 
compelled  to  pay  more  than  their  due  proportion  can  com- 
pel contribution  from  other  delinquent  stockholders  up  to 
their  proportion  of  the  debts  paid.' 

Where  corporate  property  has  been  purchased  with 
stock,  the  stock  issued  therefor  is  usually  supposed  and  in- 
tended to  be  full-paid.  If,  however,  there  has  been  unfair 
dealing  or  such  overvaluation  of  the  property  as  to  be 
fraudulent,  the  stock  might  be  held  but  partly  paid  and  in 
case  of  insolvency  there  would  then  be  a  liability  to  the 
corporate  creditors  for  the  amount  still  due.^°  (See  "Full- 
paid  Stock."  §  29;  also  "Exchange  of  Property  for  Stock," 
Ch.  XXVI.) 

An  exception  to  the  general  rule  that  a  corporation 
may  not  sell  its  stock  below  par  on  original  issue  without 

'New  Lamp  Chimney  Co.  v.  Brass  Co.,  91  U.  S.  656  (1875);  Terry  v.  Tubman, 
92  U.  S.  156   (1875). 

•Tn  re  Crystal  Spring  Co.,  96  Fed.  945  (1899);  Scovill  v.  Thayer,  105  U.  S.  143 
(1881). 

•  3  Thomp.  Corp..  §  3816. 

"  For  full  discussion  of  issuance  of  stock  for  property,  see  Conyngton  on  Corp. 
Organization,  pp.  204-225. 


110  STOCKHOIvDERS. 

involving  liabilities  to  subscribers,  is  found  v^hen  a  cor- 
poration is  financially  embarrassed  and  in  danger  of  be- 
coming insolvent.  If  it  still  has  unissued  stock  it  may 
then  sell  this  stock  for  any  price  reasonably  possible  and 
the  purchasers  incur  no  obligation  for  the  unpaid  portion. 
It  may  be  noted  that  the  payment  of  commissions  on 
the  sale  of  stock  when  reasonable  is  not  held  to  constitute 
a  sale  of  stock  below  par,  even  though  the  net  proceeds 
are  thereby  diminished  to  less  than  the  par  value  of  the 
stock. ^^ 

§  74.     Liabilities  of  Purchasers  of  Stock. 

Stock  issued  direct  by  the  corporation  is  termed  an 
original  issue  as  distinguished  from  stock  transferred 
thereafter  from  one  stockholder  to  another  or  taken  from 
the  treasury  stock  of  the  corporation  itself.  If  such  out- 
standing stock  is  purchased  in  good  faith  with  the  under- 
standing or  express  statement  that  is  is  full-paid,  and  par- 
ticularly when  the  certificates  are  so  marked,  the  pur- 
chaser does  not  incur  any  liability  either  to  the  corpora- 
tion or  its  creditors  even  though  the  subscription  price  or 
the  par  value  of  such  stock  has  not  been  paid  in  to  the 
corporation.  In  any  such  case  the  unpaid  liability  on  the 
stock  either  remains  with  the  transferrer  or  is  lost.^^     (See 

§48.) 

When,  however,  a  purchaser  takes  unpaid  stock  with  a 
knowledge  of  the  conditions,  the  liability  for  any  call  al- 
ready made,  even  though  the  payment  date  of  such  call 
has  not  yet  arrived,  remains  with  the  transferrer,  but  the 
transferee  is  liable  for  any  subsequent  calls.^^ 

The  general  rule  is,  however,  modified  by  statute  in 
many  of  the  states.  Thus  in  Oregon  and  Tennessee  the 
liability  on   unpaid   stock   remains   with   the   transferrer, 

"Arapahoe,  etc.,  Co.  v.  Stevens.  13  Colo.  534  (1889);  Zabel  v.  New  State,  etc. 
Co.,  86  N.  W.   Rep.    (Mich.)    949   (1901). 

"Wpst  Na«=hvi11e,  etc.  Co.  v.  Bank.  86  Tenn.  252  (1888);  Brant  v.  Ehlen,  59 
Md.  1   (1882);  Rood  v.  Whorton,  67  Fed.  434  (1895). 

"Boulton  Carbon  Co.  v.  Mills,  78  Iowa  460  (1889);  5  L.  R.  A.  649;  Webster  v. 
Upton,  91  U.   S.  65   (1875). 


WABIUTIES  OF  STOCKHOLDERS.  Ill 

while  in  Kentucky  it  continues  with  the  transferrer  for  two 
years  from  the  date  of  transfer,  and  in  Maine  and  Mis- 
sissippi for  one  year.  In  Wisconsin  the  liabihty  may  be 
shifted  to  the  transferee  with  the  consent  of  the  corpora- 
tion but  the  liability  of  the  seller  continues  notwithstand- 
ing for  six  months  after  the  transfer.  In  Nebraska  the 
liability  follows  the  unpaid  stock.  In  Illinois  both  trans- 
ferrer and  transferee  are  liable. 

The  common  law  liability  of  holders  of  unpaid  stock 
for  any  unpaid  portion  of  its  par  value  is  confirmed  by 
statute  in  most  states  of  the  Union.  In  a  few  states  this 
common  law  liability  has  been  extended,  and  in  a  number 
of  states  additional  liabilities  are  imposed.  These  subse- 
quent or  additional  liabilities  extend  to  all  stockholders, 
whether  their  stock  is  full-paid  or  otherwise. 

Thus  in  California  stockholders  are  liable  in  propor- 
tion to  their  stock  interests,  for  all  debts  of  the  corporation. 
In  Minnesota  a  double  liability  is  imposed,  save  as  to 
stockholders  of  manufacturing"  and  mechanical  corpora- 
tions. In  Arizona  stockholders  are  liable  for  all  debts  of 
the  corporation  unless  expressly  otherwise  provided  in  the 
charter  of  the  corporation.  In  Wisconsin  stockholders 
are  liable  for  all  debts  of  the  corporation  until  one-half  the 
capital  stock  is  subscribed  and  twenty  per  cent,  has  been 
paid  in.  In  Nebraska  a  double  liability  is  imposed  if  th'i 
incorporation  is  defective  or  if  the  annual  report  of  indebt- 
edness is  not  made.  The  stockholders  of  a  New  Hamp- 
shire corporation  are  liable  for  all  the  corporate  debts  until 
its  capital  stock  has  been  paid  in  full  and  has  been  duly 
certified.  In  Massachusetts,  New  York,  Pennsylvania, 
Indiana  and  a  number  of  other  states,  stockholders  are 
liable  for  corporate  debts  for  labor  performed,  or  for 
amounts  due  employees  of  the  corporation.  In  Wiscon- 
sin a  double  liability  exists  for  certain  labor  claims.  In 
several  states  the  statutes  expressly  provide  that  the  Ha- 


1 12  STOCKHOLD:eRS. 

bilities  of  a  stockholder  may  be  extended  by  proper  pro- 
vision in  the  charter  of  the  corporation. 

On  the  other  hand,  in  some  few  states  special  exemp- 
tions are  found,  as  in  Delaware,  New  Jersey,  Indiana  and 
New  Mexico,  where,  regardless  of  whether  it  is  full-paid 
or  otherwise,  preferred  stock  is  exempt  from  all  claims  of 
corporate  creditors;  or  in  Ohio  where  preferred  stock 
is  liable  only  after  the  liability  of  common  stock  has  been 
exhausted;  or  in  Tennessee  where  preferred  stock  is  not 
liable  for  corporate  debts  unless  it  has  the  voting  power; 
or  in  Michigan  where  preferred  stockholders  are  exempt 
from  personal  liability  for  all  corporate  debts  save  for 
labor  performed.  In  New  Mexico  common  stock  may  be 
exempted  from  the  usual  liabilities  by  proper  procedure. 

Statutory  liabilities  pertaining  to  irregularities  of  in- 
corporation are  treated  of  in  the  section  which  follows. 

§  75.     Liabilities  of  Stockholders  as  Partners. 

In  every  state  of  the  Union  the  procedure  for  the  for- 
mation of  a  corporation  is  prescribed,  and,  if  this  pro- 
cedure is  duly  followed  and  the  charter  is  granted  by  the 
proper  authorities,  the  corporation  comes  into  being  with 
every  right  and  privilege  of  a  corporation.  Also  if  an 
honest  effort  has  been  made  to  comply  with  the  law, 
minor  omissions,  failures  or  irregularities  will  not  invali- 
date the  incorporation.^'*  Even  when  material  errors 
omissions  or  failures  occur  in  the  observance  of  the  pre- 
scribed formalities,  the  usual  effect  is  the  formation  of  a 
de  facto  corporation,  liable  at  the  suit  of  the  state  to  be 
deprived  of  its  right  to  do  business  as  a  corporation,  but, 
until  this  is  done,  having  every  corporate  right  and  privi- 
lege,^^ and  its  stockholders  having  only  the  usual  liabilities 
of  stockholders. 

"  1  Cook  on  Corp.,  §  234. 

"Swartout  v.  Railroad  Co.,  24  Mich.   389   (1872);  Harris  v.  I<and  Co.,   128  Ala. 
652   (1900);   Cooley  on  Const.  Limitations,  §  309. 


LIABILITIES  OF  STOCKHOLDERS.  113 

When,  however,  there  is  some  essential  irregularity  or 
failure,  as  for  instance  if  there  is  no  legal  authority  for  the 
formation  of  a  corporation  such  as  was  purposed,  or  if  the 
filing  of  the  prescribed  charter  or  articles  of  association 
was  omitted,  there  is  not  even  a  de  facto  corporation  and 
the  parties  engaged  may  be  held  liable  as  partners,  and  this 
applies  to  those  entering  after  organization  of  the  corpora- 
tion as  well  as  to  those  originally  involved.^*^ 

Also  in  a  number  of  the  states,  by  express  statutory 
provision,  defects  in  observance  of  the  statutory  procedure 
for  incorporation,  or  failure  to  observe  the  requirements 
of  the  laws  relating  to  corporations  thereafter,  render  the 
stockholders  of  such  corporations  liable  as  partners.  Thus 
stockholders  are  liable  in  Iowa  as  partners  if  the  incorpora- 
tion has  been  irregular,  and  in  Florida  if  the  incorporation 
has  been  irregular  or  incomplete.  In  Illinois,  also,  the 
stockholders  are  liable  as  partners  if  the  provisions  of  the 
law  are  not  complied  \yith,  and  in  Maine  they  are  liable 
for  the  corporate  debts  in  case  of  failure  or  fraud  in  ob- 
servance of  the  corporation  laws.  In  a  few  states  lia- 
bilities follow  if  some  specific  act  is  not  performed,  as  in 
Louisiana  and  Idaho  where  the  stockholders  are  liable  as 
partners  unless  the  word  "Limited"  follows  the  corporate 
name  in  all  advertising  matter,  on  signs,  etc.,  while  in  Ne- 
braska a  double  liability  is  imposed  if  the  incorporation  is 
defective  or  if  the  annual  report  of  corporate  indebted- 
ness is  not  made  as  prescribed. 

Where  stockholders  of  a  corporation  reside  in  another 
state  or  when  a  corporation  is  formed  in  one  state  to  do 
business  in  another,  the  stockholders  usually  incur  only 
such  liabilities  as  are  prescribed  in  the  state  of  incorpora- 
tion. If,  however,  a  company  is  incorporated  in  one  state 
to  carry  on  in  another  state  business  of  a  nature  not  al- 
lowed to  corporations  organized  in  that  other  state,  the 

"Montgomery  v.  Forbet,  148  Mass.  249   (1889);   Eaton  ▼.  Walker,  76  Mich.   579 
(1889);   Jones  v.   Hardware   Co.,   21    Colo.    263    (1895).. 


1 14  STOCKHOI.DERS. 

parties  engaged  may  be  held  liable  as  partners. ^^  Also 
corporations  organized  in  one  state  to  conduct  businesses 
in  other  states  which  they  are  not  authorized  to  carry 
on  in  the  state  of  incorporation,  as  to  build  railroads  or  do 
a  banking  business,  are  sometimes  held  to  be  merely  part- 
nerships in  these  other  jurisdictions.^^ 

§  76.     Assessment  Liability. 

"It  is  a  principle  of  law,  coeval  with  the  existence  of 
corporations  having  a  capital  stock,  that,  unless  the  cor- 
porate charter  or  a  constitutional  statute  provides  other- 
wise, a  stockholder,  the  full  par  value  of  whose  stock  has 
been  paid  in,  is  not  liable  and  cannot  be  made  to  pay  any 
sums  in  addition  thereto.  The  mere  legislative  act  of 
creating  a  corporation  produces  by  implication  this  limited 
liability  of  its  members."^' 

This  exemption  from  liability  of  stockholders  whose 
stock  is  full-paid  is,  however,  subject  to  modification,  as 
stated,  either  by  statute  provision  or,  as  to  the  corporation, 
by  charter  provision.  Accordingly  we  find  the  power  of 
levying  assessments  is  given  by  the  statutes  in  a  number 
of  states.  Thus  in  California  and  Idaho  assessments  may 
be  made  by  the  directors  for  the  purpose  of  paying  ex- 
penses, conducting  the  business  or  paying  debts.  The 
same  provision  exists  in  North  and  South  Dakota.  In 
Colorado  mining  and  irrigation  companies  may,  under  cer- 
tain circumstances,  assess  full-paid  stock.  In  Montana 
full-paid  stock  may  be  made  liable  to  assessments  by  char- 
ter provision,  or  the  charter  may  expressly  exempt  it,  but 
in  such  case  the  provision  for  non-assessment  may  be 
changed  by  three-fourths'  written  consent  of  the  stock- 
holders. 

Where  power  of  assessment  of  full-paid  stock  is  given 

"Empire  Mills  v.  Alston  Grocery  Co.,  15  S.  W.  Rep.   (Texas)  200,  SOS   (1891). 

'•Land  Grant  Ry.  v.  Commissioners,  6  Jvans.  245   (1870). 

"1  Cook  on  Corp.,  §241;  United  States  v.  Stanford,  161  U.  S.  412   (1896). 


LIABIUTIES  OF  STOCKHOLDERS.  115 

the  directors,  any  assessed  amount  is  merely  a  liability  of 
the  stock,  not  extending  to  other  property  of  the  parties 
who  hold  the  assessed  stock.  If  the  assessments  are  not 
paid,  the  defaulting  stock  may  be  forfeited  by  prescribed 
statutory  procedure,  but  this  ends  the  matter. 

§  77.     Liability  for  Disbursements  from  Capital. 

The  capital  of  a  corporation  is  considered  a  fund  held 
for  the  protection  of  the  corporate  creditors  and  therefore 
not  to  be  distributed  in  any  way  among  the  stockholders 
save  on  dissolution  of  the  corporation,  and  then  only  in 
accordance  with  the  provisions  of  the  law.  For  this  rea- 
son dividends  can  lawfully  be  declared  only  from  surplus 
profits. 

In  New  York  and  some  other  states,  the  declaration 
of  any  dividend  which  impairs  the  capital  stock  is  made  a 
penal  offense.  In  almost  every  state  of  the  Union  such 
dividends  are  illegal  and  corporate  creditors  may  reclaim 
them  from  stockholders  to  whom  they  are  paid.  In  like 
manner  stockholders  are  liable  to  the  corporate  creditors 
for  any  assets  of  the  corporation  received  by  them  in  any 
way,  save  as  a  dividend  from  profits. ^°  There  is  no  such 
liability  for  dividends  declared  from  profits,  even  though 
the  company  afterward  becomes  insolvent. ^^  (See  Ch. 
XX.) 


"Finn  v.   Brown,    142  U.    S.   56    (1891);    Hastings  v.   Drew,   76   N.   Y.   9    (1879); 
Bartlett  v.  Drew,   57  N.   Y.   587   (1874). 
"Reid  V.  Mfg.   Co.,  40  Ga.  98   (1869). 


CHAPTER   X. 
ANNUAL  MEETING  OF  STOCKHOLDERS. 


§  78.     The  Annual  Meeting. 

The  annual  meeting  of  stockholders  is  prescribed  by 
statute  in  most  states,  and  elsewhere  is  required  by  the 
charter  or  by-laws  of  the  corporation.  It  is  the  only 
usual  regular  meeting  of  stockholders.  If  other  meetings 
are  necessary,  they  are  "special  meetings,"  called  as  re- 
quired. 

Stockholders'  meetings  must  be  held  within  the  state 
of  incorporation.  In  many  states  the  statutes  so  provide. 
Elsewhere  it  is  a  matter  of  common  law,^  save  in  some 
few  instances,  as  in  Delaware,  West  Virginia  and  Ari- 
zona, where  the  statutes  expressly  provide  that  stock- 
holders' meetings  may  be  held  out  of  the  state.  The 
principal  office  of  the  company  within  the  state  is  the 
customary  and  most  appropriate  place  for  stockholders' 
meetings  and  in  many  states  is  the  place  designated  by 
statute. 

The  by-laws  usually  prescribe  the  details  of  the  an- 
nual meeting,  such  as  the  time  and  place,  the  notice  re- 
quired, the  number  necessary  to  constitute  a  quorum,  the 
time  of  closing  books,  the  officers  of  the  meeting  and  the 
order  of  business.  By-law  provisions  also  usually  regu- 
late the  use  of  proxies,  method  of  casting  votes  and  the 
employment  of  inspectors  or  tellers  at  elections  of  direc- 
tors. 

1  Ormsby  v.  Vermont  Mining  Co.,  56  N.  Y.  623   (1874). 

116 


ANNUAL   MEE;TING  OF   STOCKHOLDERS.  117 

Whenever  there  is  any  probability  of  the  proceedings 
of  the  annual  meeting  being  attacked  or  when  there  are 
any  disputes  or  differences  of  opinion  among  the  stock- 
holders of  a  corporation,  every  formality  in  connection 
with  the  annual  meeting  should  be  carefully  observed. 
Under  other  circumstances  such  close  observance,  though 
always  advisable,  is  not  so  essential.  If  the  proceedings 
are  characterized  by  good  faith  and  are  a  fair  expression 
of  the  sense  of  those  present,  "mere  irregularities  in  the 
manner  of  conducting  the  business  are  immaterial."^ 

§  79.     Closing  Transfer  Books. 

•  The  corporate  calendar  (See  §  153;  Form  198)  should 
show  the  exact  date  prior  to  the  annual  meeting  on  which 
the  transfer  books  are  to  be  closed  to  transfers,  (See 
§  37.)  The  object  in  thus  closing  the  books  is  to  obviate 
any  uncertainty  as  to  who  is  entitled  to  receive  notice  of 
and  to  vote  at  the  annual  meeting. 

§  80.     Notice  of  Annual  Meeting. 

Notice  of  the  annual  meeting  is  usually  prescribed  by 
the  by-laws  and  in  some  few  states  is  required  by  statute. 
Such  notice  is  not,  however,  of  the  same  vital  importance 
as  in  the  case  of  special  meetings,  since  the  time  and 
place  of  the  annual  meeting  are  specified  in  the  by-laws 
and  are  supposed  to  be  familiar  to  the  stockholders.  For 
this  reason,  failure  to  send  out  notice  of  its  time  and  place 
as  required  by  the  by-law^s,  while  a  very  serious  breach 
of  duty  on  the  part  of  the  secretary,  is  not  ordinarily  held 
to  invalidate  the  proceedings  of  the  meeting,  save  as  to 
any  unusual  or  specially  important  business  considered 
thereat.^ 

The   notice   of   the   annual   meeting  should   not   only 

»  2  Cook  on  Corp,  §  606. 

»1   Morawetz,  §  482;   Warner  v.  Mower,   11   Vt.   385    (1839);   Sampson  t.  Steam 
Mill,   36  Me.   78   (1853). 


118  STOCKHOLDERS. 

specify  its  time  and  place  but  also  its  objects.  This  is  not 
always  legally  necessary  but  is  an  advisable  precaution, 
particularly  when  business  of  special  importance  is  to  be 
considered  thereat.  "Where  unusual  business  is  to  be 
transacted  even  at  a  regular  meeting,  the  notice  of  that 
meeting  should  state  the  unusual  business."'*  In  Penn- 
sylvania it  has  even  been  held  that  important  amendments 
of  the  by-laws  cannot  be  legally  effected  at  the  annual 
meeting  unless  previously  notified  to  the  stockholders.^ 
In  the  larger  corporations  the  by-laws  frequently  pro- 
vide specifically  that  any  failure  or  irregularity  in  the 
notice  of  the  annual  meeting  shall  not  affect  its  validity  or 
the  validity  of  any  of  its  proceedings. 

Written  notice  of  the  annual  meeting  mailed  to  the 
stockholders  of  record  is  usually  prescribed.  This  notice 
should  be  signed  with  the  oliticial  signature  of  the  secre- 
tary or  other  corporate  officer  authorized  thereto,^  and 
should  be  mailed,  postage  paid,  on  the  date  specified  in 
the  by-laws — which  ranges  widely  from  five  to  sixty  days 
or  more  before  the  date  of  the  meeting — to  the  address 
of  each  stockholder  as  shown  by  the  books  of  the  com- 
pany. (See  Forms  55-59.)  A  copy  of  the  notice  with 
date  of  sending  endorsed  thereon,  should  be  preserved  by 
the  secretary  as  evidence  that  proper  notice  of  the  meet- 
ing has  been  given. 

Publication  of  the  notice  of  annual  meeting  is  in  some 
states  required  by  statute,  and  is  customary  in  all  states 
among  the  larger  corporations.  It  is,  however,  a  most 
uncertain  and  inadequate  method  of  notification  and  should 
only  be  used  in  connection  with  notice  by  mail.  Copies 
of  the  papers  in  which  the  publication  notice  appears 
should  be  preserved  by  the  secretary  as  proof  of  due  pub- 
lication, or,  if  preferred,  a  copy  of  the  notice  may  be  made 
and  an  affidavit  of  the  publisher  or  of  the  secretary  cer- 

«2  Cook  on   Corp.,   §   595. 

•Bagley  v.   Reno,  201   Pa.   St.   78   (1902). 

'Johnston  v.  Jones,  23  N.  J.  Eq.  216   (1872). 


ANNUAL  MEETING  OE  STOCKHOLDERS.  119 

tifying  to  its  due  publication  be  attached.     (See   §  87; 
also  Forms  165-167.) 

The  notice  of  the  annual  meeting  usually  states  the 
dates  for  the  closing  and  reopening  of  the  transfer  books. 

§  81.     Preparations  for  Annual  Meeting. 

It  is  the  secretary's  duty  to  see  that  all  stationery, 
blanks  and  materials  and  any  of  the  corporate  books  or 
documents  in  his  keeping  that  may  be  needed  at  the  meet- 
ing, are  at  hand  or  readily  accessible  at  the  proper  time. 
His  preparations  will  also  usually  include, — 

(i)  Order  of  Business.  Unless  the  presiding  officer  is 
very  familiar  with  the  regular  order  of  business  as  given 
in  the  by-laws  of  the  company,  a  copy  should  be  prepared 
by  the  secretary  in  convenient  form  for  reference  and  be 
handed  to  the  chairman  at  or  before  the  time  he  takes 
charge  of  the  meeting.     (See  Form  24,  By-laws,  Art.  II.) 

The  object  of  the  formal  order  of  business  is  to  insure 
the  systematic  and  orderly  conduct  of  meetings  and  of  the 
business  of  such  meetings.  The  order  prescribed  is,  how- 
ever, directory,  not  mandatory  as  are  most  of  the  by-law 
regulations,  and  may  therefore  be  suspended  at  anv  meet- 
ing in  whole  or  in  part,  either  by  a  majority  vote  of  those 
present  or  by  their  mere  assent.'' 

(2).  List  of  Stockholders.  Under  the  laws  of  New  Jer- 
sey and  some  other  states,  an  alphabetical  list  of  the  stock- 
holders entitled  to  vote  at  the  annual  meeting  must  be 
prepared  by  the  secretary,  be  presented  at  the  meeting 
and  be  kept  there  for  the  inspection  of  any  stockholder. 
The  requirement  is  a  reasonable  one,  and  a  similar  list 
will  be  found  a  convenience  in  any  state.  Its  preparation 
is  frequently  made  a  by-law  requirement. 

This  list  of  stockholders  is  made  out  from  the  stock 
books  after  they  are  closed  to  transfers,  and  gives  the 

'Matter  of  Wheeler,  2  Abb.  Pr.  (N.  S.)  361  (1866);  Matter  of  ^.loLawk,  etc. 
R.  R.  Co.,  19  Wend.  135   (1838). 


120  STOCKHOLDERS. 

names  and  addresses  of  the  stockholders  and  the  amount 
of  stock  held  by  each.  It  must  be  remembered,  however, 
that  the  company's  stock  books  are  the  final  authority  in 
any  such  matters  and  should  be  at  hand  for  reference  in 
case  the  accuracy  of  the  list  is  impugned.^ 

In  the  smaller  corporations  the  secretary  will  in  addi- 
tion find  an  alphabetical  list  of  the  stockholders  of  much 
convenience  for  his  own  use.  This  list  should  be  ar- 
ranged with  columns  in  which  may  be  noted  those  present 
in  person  or  by  proxy,  those  absent  and  the  amount  of 
stock  held  by  each.     (See  Form  99.) 

(3)  Outline  Minutes.  These  will  be  found  convenient 
for  the  use  of  the  secretary.  Properly  prepared,  they 
cover  all  routine  business  so  that  a  few  short  pencil  notes 
will  usually  dispose  of  these  matters,  leaving  the  secretary 
free  to  attend  to  any  new  or  special  business  that  may  de- 
mand his  services.     (See  Form  100.) 

§  82.     Officers  of  Meetings. 

No  fixed  rule  prevails  as  to  officers  of  stockholders' 
meetings.  The  regular  officers  of  the  company  usually 
serve,  but  not  unless  authorized  thereto  by  the  charter  or 
by-laws.  If  no  such  provision  exists,  the  stockholders  elect 
or  appoint  the  officers  of  their  own  meetings.  As  a  rule, 
the  secretary  so  appointed  should  be  the  secretary  of  the 
company.  To  appoint  a  secretary  not  familiar  with  the 
records,  the  personnel  and  the  general  condition  of  the 
company  is  apt  to  cause  delay  and  confusion  and  is  but 
seldom  advisable. 

When  the  regular  officers  are  designated,  the  president 
will  take  charge  of  the  meeting  as  a  matter  of  course,  or 
in  his  absence  the  vice-president  takes  the  chair.  If  both 
are  absent,  the  treasurer  might  act  as  presiding  officer. 
If  the  treasurer  is  also  absent,  the  secretary  might  very 

•Johnston  v.  Jones,  23  N.  J.  Eq.  216   (1872);   Downing  v.  Potts,  23  N.  J.  L.  66 
(1851). 


ANNUAL  MEETING  OE  STOCKHOLDERS.  121 

properly  ask  someone  present  to  call  the  meeting  to  order, 
who  will  then  preside  until  a  more  permanent  chairman 
is  selected,  or  the  secretary  might  act  temporarily  him- 
self. If  so,  he  should  not  preside  longer  than  is  necessary 
for  the  appointment  of  a  chairman.  He  cannot  act  as 
president  and  secretary  at  the  same  time,  and  his  more 
important  duty  is  to  record  the  proceedings  of  the  meet- 
ing. In  the  absence  of  all  the  regular  officers  from  the 
meeting,  the  stockholders  appoint  a  chairman  and  a  sec- 
retary pro  tent,  who  serve  for  that  meeting. 

§  83.     Opening  the  Meeting. 

Usually,  as  stated,  the  by-laws  provide  that  the  presi- 
dent and  secretary  of  the  company  shall  officiate  at  stock- 
holders' meetings.  In  such  case,  at  the  appointed  time 
and  place  the  president,  or  in  his  absence  the  next  rank- 
ing officer  present,  requests  the  meeting  to  come  to  order, 
and  the  secretary,  if  he  has  not  already  done  so,  furnishes 
the  presiding  officer  with  a  copy  of  the  order  of  business 
and  presents  a  list  of  the  stockholders  of  the  company 
which  remains  open  during  the  meeting  for  the  inspection 
of  those  present. 

§  84.    Roll-Call.  '  ^ 

In  the  smaller  corporations,  the  presiding  officer  after 
calling  the  meeting  to  order  requests  the  secretary  to  call 
the  roll.  Practice  varies  as  to  the  precise  manner  of 
roll-call.  Usually  the  secretary  employs  an  alphabetical 
list  prepared  for  the  purpose  and,  calling  the  names  if  he  is 
not  personally  acquainted  with  all  the  stockholders,  notes 
thereon  those  present  either  in  person  or  by  proxy,  and 
any  absentees.     (See  Form  99.) 

In  the  larger  corporations  this  plan  is  not  practicable. 
When  the  list  of  stockholders  runs  far  up  in  the  hun- 


122  STOCKHOLDERS. 

dreds  or  thousands,  an  actual  call  of  roll  is  obviously  im- 
possible. Instead,  the  chairman  first  requests  the  stock- 
holders present  in  person  to  report  to  the  secretary.  As 
each  reports,  reference  is  made  to  the  secretary's  list  of 
stockholders,  and  if  the  person  reporting  is  found  thereon, 
his  name  and  the  amount  of  stock  he  holds  are  recorded. 
The  chairman  then  calls  for  those  who  represent  stock- 
holders by  proxy.  These  also  report,  each  giving  the 
name  of  the  stockholder  and  the  number  of  shares  he 
represents,  handing  in  his  proxy  or,  after  exhibiting  the 
original,  a  certified  copy  thereof,  as  evidence  of  his  right 
to  vote.  The  statements  are  verified  in  each  case,  and 
the  names  of  both  principal  and  proxy  and  the  stock  rep- 
resented are  duly  noted.  In  this  w^ay  the  number  of 
shares  represented  and  entitled  to  vote  at  the  meeting  is 
arrived  at  accurately  and  expeditiouply. 

After  the  secretary  has  completed  the  roll-call  or  an- 
notation of  stockholders  present,  he  announces  to  the 
chairman  the  total  number  of  shares  outstanding  entitled 
to  vote,  the  number  necessary  to  constitute  a  quorum,  the 
number  represented  at  the  meeting,  in  person  and  by 
proxy,  and,  if  such  is  the  fact,  that  they  constitute  a 
quorum. 

If  a  quorum  is  present,  the  presiding  officer  announces 
the  fact  and  states  that  the  meeting  will  proceed  to  busi- 
ness. (See  §  86.)  If  a  quorum  is  not  present  and  no 
other  stockholders  can  be  secured,  the  meeting  may  take 
either  one  of  two  courses.  It  may  adjourn  sine  die,  whicli 
defers  the  election  of  directors  indefinitely  and  leaves  the 
existing  board  to  hold  over  until  the  next  annual  meeting 
or  until  a  special  meeting  is  called  for  the  election  of  di- 
rectors, or  the  meeting  may  adjourn  from  day  to  day  or, 
if  the  charter  or  by-laws  so  permit,  to  any  desired  future 
date,  when,  if  a  quorum  is  secured,  the  meeting  may  be 
held.     (See  §  93.) 


ANNUAL   MEETING  OE  STOCKHOLDERS.  l23 

The  important  point  to  be  determined  at  roll-call  is  the 
amount  of  stock  represented.  The  number  of  persons 
present  is  immaterial.  One  man,  by  stock  ownership  or 
proxies,  or  by  both,  might  represent  the  entire  outstand- 
ing stock  of  the  company  and  such  meeting,  if  properly 
conducted,  is  legal  in  this  country.^  In  England  it  has 
been  held  that  one  person  cannot  hold  a  meeting.^"  In 
either  country,  however,  the  party  in  control  could  avoid 
all  question  and  satisfy  every  requirement  by  giving 
proxies  for  one  or  more  shares  of  stock  to  convenient 
parties  and  allowing  the  parties  thus  qualified  to  partici- 
pate with  him  in  the  meeting. 

§  85.     Proxies. 

A  proxy  is  a  special  power  of  attorney  executed  by  a 
stockholder  of  the  corporation  and  authorizing  some 
specified  person  to  represent  him  at  one  or  more  stock- 
holders' meetings  of  that  corporation.  A  party  who  holds 
and  exercises  the  powers  of  a  proxy  is  said  to  act  as  a 
proxy.  Any  person  competent  to  act  as  an  agent  may 
act  as  a  proxy. ^^     (See  Ch.  XXX,  "Forms  of  Proxies.") 

The  right  to  vote  by  proxy  is  not  a  common  law 
right. ^^  It  cannot  therefore  be  exercised  unless  conferred 
either  by  constitutional  provision  as  is  the  case  in  some 
states,  by  statute  provision  as  is  the  case  in  many  states, 
or  otherwise  by  charter  or  by-law  provisions. 

In  the  majority  of  states  the  statutes  prescribe  that 
voting  at  stockholders'  meetings  may  either  be  in  person 
or  by  proxy.  In  some  states  the  statutes  are  merely  per- 
missive, allowing  voting  by  proxy  if  provision  therefor  is 
made  by  charter  or  by-laws.     Variations  or  restrictions 

•Morrill  v.  Little  Falls  Mfg.  Co.,  S3  Minn.  371  (1893);  see  note  21  L.  R.  A. 
174. 

'»Sharpe  v.  Dawes,  2  Q.  B.  D.  26  (1876);  in  re  Sanitary  Carbon  Co.,  12  W.  N. 
223   C1877) 

"People's  Bank  v.  Superior  Court,  104  Cal.  649  (1894);  Re  Lighthall  Mfg.  Co.. 
47  Hun  258   (1888). 

"  Philips  V.  Wickham,   1   Paige  590   (1829). 


124  STOCKHOLDEJRS. 

of  the  usual  right  to  vote  by  proxy  are  found  in  many, 
states.  Thus  in  New  Hampshire  no  person  may  vote  as 
proxy,  or  as  principal  and  proxy,  for  shares  exceeding  one- 
eighth  of  the  whole  capital  stock.  In  Maine,  a  general 
power  of  attorney  authorizing  the  voting  of  stock  is  good 
until  it  expires  or  is  revoked,  but  a  proxy  must  have  been 
executed  within  thirty  days  preceding  the  day  of  meet- 
ing. In  Pennsylvania  a  proxy  must  have  been  executed 
within  two  months  of  the  date  of  meeting;  in  Massa- 
chusetts within  six  months;  in  New  York,  California  and 
Connecticut  within  eleven  months;  in  Minnesota  within 
one  year;  in  New  Jersey,  Delaware,  North  Carolina  and 
Porto  Rico  within  three  years,  and  in  New  Mexico  within 
five  years. 

The  original,  or  a  duplicate  or  certified  copy  of  every 
proxy  should  be  filed  with  the  secretary  of  the  meeting  at 
which  the  powers  conferred  by  the  proxy  are  to  be  ex- 
ercised, and  should  be  preserved  by  him  in  case  the  validity 
of  the  meeting  or  any  of  its  proceedings  should  be  ques- 
tioned. If  the  proxy  is  a  continuing  one,  it  should  be  filed 
at  the  first  meeting  at  which  its  powers  are  exercised  but 
need  not  be  filed  at  subsequent  meetings. 

§  86.     Quorum. 

A  quorum  at  stockholders'  meetings  is  the  number  of 
shares  of  stock  which  must  be  represented — or  the  num- 
ber of  members  which  must  be  present — to  duly  constitute 
the  meeting  and  enable  the  legal  transaction  of  business. 
In  some  of  the  states  the  statutes  provide  that  at  least  a 
majority  of  the  outstanding  stock  must  be  present  in  order 
to  constitute  a  quorum.  Elsewhere  a  similar  provision  is 
usually  inserted  in  the  charter  or  by-laws  of  the  particular 
corporation.  If  no  regulating  provisions  exist,  the  com- 
mon law  prevails,  under  which  those  present  at  a  duly 
assembled  stockholders'  meeting  are  entitled  to  act,  no 


ANNUAL   MEETING  OF  STOCKHOLDERS.  125 

matter  whether  they  represent  a  majority  of  the  outstand- 
ing stock  or  otherwise.  "The  law  is  clear  that  those 
stockholders  who  attend  a  duly  called  stockholders'  meet- 
ing may  transact  the  business  of  that  meeting,  although 
a  majority  in  interest  or  in  number  of  the  stockholders  are 
not  present."''' 

In  the  absence  of  conflicting  statutes,  the  stock  neces- 
sary to  constitute  a  quorum  may  be  fixed  at  any  amount 
desired.  The  usual  and  best  practice  requires  a  majority 
of  all  the  outstanding  stock.  A  smaller  quorum  is  some- 
times prescribed  but  is  not  always  safe.  A  majority  of  a 
legal  quorum  may  always  act.  Hence  if  less  than  a  ma- 
jority constitutes  a  quorum,  it  is  entirely  possible  that 
matters  of  the  greatest  importance  to  the  corporation  will 
be  decided  by  less  than  one-fourth  of  the  outstanding 
stock. 

It  may  be  noted  that  the  statutes  of  a  few  states — 
New  York  among  them — reaffirm  the  common  law  as  to 
a  quorum  in  the  case  of  meetings  for  the  election  of  direc- 
tors.''*  In  these  states  the  stockholders,  meeting  at  the 
duly  appointed  time  and  place  for  the  election  of  directors, 
have  power  to  act  regardless  of  the  amount  of  stock  they 
represent. ^^ 


§  87.     Proof  of  Notice. 

After  the  presence  of  a  quorum  has  been  ascertained, 
the  secretary,  in  response  to  a  request  from  the  chair, 
should  submit  proof  that  due  notice  of  the  meeting  has 
been  given.  For  this  purpose  a  copy  of  the  notice  should 
be  exhibited  with  the  secretary's  certificate  as  to  its  due 
service  attached.  If  greater  formality  is  desired,  the  sec- 
retary's certificate  might  appear  in  the  form  of  an  affi- 

"  2  Cook  on  Corp.,  S  607. 

"Stock  Corp.  Law   (N.  Y.),  5  20. 

"Matter  of  Rapid  Transit  Ferry,  IS  App.  Div.   (N.  Y.)  530  (1897). 


126  STOCKHOLDERS. 

davit.  When  less  formality  is  deemed  sufficient,  the  sec- 
retary merely  presents  a  copy  of  the  notice  with  a  verbal 
statement  that  it  has  been  sent  out  as  required  by  the  by- 
laws.    (See  Forms  165-167.) 

If  notice  by  publication  has  been  given,  the  secretary 
should  exhibit  copies  of  the  papers  containing  the  notice, 
or  copies  of  the  notice  with  the  affidavit  of  the  publisher 
or  of  the  secretary  himself  as  to  its  publication.  If  the 
formality  of  an  affidavit  is  deemed  unnecessary,  the  secre- 
tary's certification,  or  even  his  mere  statement,  as  to  the 
facts  of  publication  will  usually  suffice. 

§  88.     Reading  of  Minutes. 

The  presiding  officer  next  calls  for  the  reading  of  any 
unapproved  minutes.  The  secretary  in  response  reads 
the  minutes  of  the  annual  meeting  held  the  preceding 
year,  also  the  minutes  of  any  special  meeting  or  meetings 
of  the  stockholders  held  during  the  year.  Occasionally 
it  will  happen  that  the  reading  of  the  minutes  at  the  pre- 
ceding annual  meeting  has  been  passed  or  the  minutes 
of  preceding  meetings  have  not  been  approved  at  such 
meeting,  and  the  secretary  will  then  go  back  still  further, 
presenting  all  minutes  of  stockholders'  meetings  that  have 
not  theretofore  been  read  and  approved. 

At  the  close  of  the  reading  of  each  set  of  minutes  or, 
if  preferred,  at  the  close  of  the  reading  of  all  unapproved 
minutes,  the  chairman  may  announce :  "If  there  are  no 
objections,  the  minutes  as  read  will  stand  approved;"  or 
a  motion  may  be  passed  that  "the  minutes  be  approved  as 
read." 

If  errors  are  discovered,  the  minutes  may  be  corrected 
at  once  or  when  the  reading  of  the  particular  minutes  is 
concluded,  or  at  any  time  previous  to  their  approval.  If 
the  errors  are  obvious  or  immaterial,  the  presiding  officer 
may,  in  the  absence  of  objection,  merely  direct  the  secre- 


ANNUAL  MEETING  OF  STOCKHOLDERS.  127 

tary  to  make  the  corrections.  If  there  is  any  question  as 
to  an  alleged  error  or  if  the  matters  are  important,  the 
correction  of  the  minutes  is  best  effected  by  motion.  If 
the  motion  prevails,  the  minutes  must  be  amended  accord- 
ingly and  are  then  "approved  as  corrected,"  usually  by 
order  of  the  president  or  chairman;  otherwise  by  formal 
motion. 

The  minutes  of  an  annual  or  special  meeting  cannot 
be  approved  at  a  special  meeting  of  stockholders  unless 
so  specified  in  the  call  for  such  meeting.  Minutes  of  a 
directors'  meeting  are  never  read  at  a  stockholders'  meet- 
ing, except  for  purposes  of  information  or  to  obtain  the 
stockholders'  ratification  of  acts  recorded  in  the  minutes. 
(See  Chs.  XIX,  XXXIII.) 

The  reading  of  the  minutes  may  be  dispensed  with,  if 
desired,  either  by  formal  motion,  or,  in  the  absence  of 
objection,  by  mere  announcement  of  the  chairman. 

§  89.     Annual  Reports. 

Under  the  usual  order  of  business  the  annual  reports 
of  officers  and  committees  follow  the  reading  of  minutes. 
The  president's  report  is  the  first  official  report  to  be  pre- 
sented. Following  this  usually  comes  the  treasurer's  re- 
port, and  if  other  officers  have  reports  to  make  or  if  the 
board  of  directors  or  any  committees  have  reports  to  sub- 
mit, they  are  in  order  at  this  time.     (See  Forms  115-117.) 

Before  a  report  presented  at  the  annual  meeting  is 
formally  received,  it  is  discussed  if  necessary  and  any  de- 
sired questions  asked  and  answered  concerning  it.  A 
motion  is  then  made  that  the  report  be  received  and  filed, 
or  otherwise  disposed  of  as  may  be  necessary,  or,  in  the 
absence  of  objection,  its  proper  disposition  may  be  effected 
by  order  of  the  chairman.  If  any  report  proves  to  be  in- 
complete, erroneous,  or  otherwise  objectionable,  a  motion 
may  be  made  to  return  such  report  for  correction  or  for 


128  STOCKHOLDERS. 

revision,  or  it  might  even  be  rejected  absolutely,  such  re- 
jection serving  as  an  emphatic  rebuke  to  the  official  or 
committee  by  whom  the  report  was  made. 

As  reports  are  ordered  received,  the  secretary,  unless 
it  is  expressly  otherwise  ordered,  takes  charge  of  and  pre- 
serves them  for  future  reference.  Reports  of  special  im- 
portance are  sometimes  ordered  spread  upon  the  minutes, 
or  entered  in  the  minute  book  immediately  following  the 
minutes  of  the  meeting, 

§  go.     Election  of  Directors. 

In  the  larger  corporations  the  annual  election  of  di- 
rectors is  the  most  important  event  in  the  corporate  cal- 
endar, deciding  the  management  and  the  general  policy 
of  the  company  for  the  ensuing  year.  (See  §§  69.  no.; 
In  small  or  close  corporations,  on  the  other  hand,  the 
election  of  directors  is  frequently  omitted,  the  directors 
then  in  office  holding  over  for  another  year  or  until  their 
successors  are  elected.  There  is  no  legal  objection  to 
this  practice  when  all  the  stockholders  acquiesce  (See 
§  112.) 

Voting  for  election  of  directors  should  be  by  ballot. 
In  perhaps  the  majority  of  the  states  the  statutes  require 
this  method  to  be  followed.  The  election  is  usually  con- 
ducted by  inspectors  or  tellers,  in  some  states  as  a  mat- 
ter of  statutory  requirement ;  elsewhere  as  a  matter  of 
by-law  provision  or  merely  of  convenience.  These  inspec- 
tors or  tellers,  usually  two  in  number,  may  be  stockhold- 
ers or  otherwise,  as  seems  best  to  the  meeting,  but  can- 
didates who  are  to  be  voted  upon  at  the  election  should 
not  be  appointed.  The  inspectors  take  entire  charge  of 
the  election.  At  its  close  they  announce  the  results,  or, 
otherwise,  hand  their  report  to  the  chairman  of  the  meet- 
ing, who  reads  the  results  from  the  inspectors'  report. 
The  report  is  then  handed  to  the  secretary  for  preserva- 


ANNUAL  MEETING  OF  STOCKHOLDERS.  129 

tion  or  for  such  other  disposition  as  may  be  prescribed. 
(See  Forms  101-106.) 

In  the  larger  corporations  the  formalities  of  an  elec- 
tion of  directors  are  usually  strictly  observed.  In  the 
smaller  corporations  such  elections  are  frequently  con- 
ducted very  informally.  Where  there  is  entire  agree- 
ment, the  board  is  sometimes  selected  by  conference,  and 
the  secretary — authorized  thereto  by  motion — casts  the 
single  ballot  of  the  meeting  for  the  parties  named. 

Unless  otherwise  provided  by  statute  or  the  charter  or 
by-law^s  of  the  corporation,  a  majority  of  the  votes  cast  at 
an  election  of  directors  held  at  a  duly  constituted  meeting 
elects,^^  even  though  these  are  not  a  majority  in  interest 
of  all  those  present  at  the  meeting.  In  other  w^ords, 
stockholders  v^ho  do  not  vote  cannot  have  their  votes 
counted  in  the  negative. ^^  The  charter  or  by-laws  may, 
however,  in  the  absence  of  any  conflicting  statutes,  modify 
this  rule  by  providing  that  the  votes  of  a  majority  of  those 
present  at  the  meeting,  or  of  a  majority  or  any  other  de- 
sired proportion  of  the  outstanding  stock,  shall  be  neces- 
sary to  elect. 

If  less  than  the  full  number  of  directors  to  be  elected 
receive  the  majority  or  plurality  vote  necessary  to  elect, 
those  receiving  the  required  majority  or  plurality  vote  are 
elected  and  another  ballot  or  another  election  may  be  held 
to  elect  the  remainder.^^  It  may  be  noted  that  unless  the 
statutes,  charter  or  by-laws  provide  that  a  plurality  of 
votes  elect,  a  majority  of  all  the  votes  cast  is  necessary  to 
an  election.^'  After  the  ballot  has  been  counted  or  an- 
nounced, it  is  too  late  to  receive  additional  votes. 

§  91.     Voting  at  Elections. 

If  the  statutes  do  not  prescribe  the  method  of  voting 

'•  2  Cook  on  Corp.,  §  608. 

"State  V.  Green,  37  O.  St.  227  (1881);   Smith  v.  Proctor,   130  N.  Y.  319   (1891). 
"•Wright  V.   Commonwealth,   109   Pa.    St.   560    (1885);   Matter  of  Union   Ins.   Co.. 
22   Wend.    (N.   Y.)    591    (1840). 

"  1  Thompson  on  Corp.,  §  775;  2  Cook  on  Corp.,  §  608. 


130  STOCKHOLDERS. 

at  elections  of  directors,  it  may  be  by  any  desired  method 
that  will  fairly  indicate  the  will  of  those  entitled  to  vote. 
(See  §  60.) 

The  stock  books  of  the  corporation  which  show  the 
transfer  and  ownership  of  stock  are  in  most  states  the 
final  and  decisive  evidence  as  to  who  is  entitled  to  vote  at 
corporate  elections.  (See  §§  35,  36,  60.)  If  the  corpora- 
tion keeps  no  other  stock  book  than  a  stock  certificate 
book,  this  will  be  sufficient  if  it  shows  the  stock  transfers 
and  ownership.  A  stockholder  cannot  be  kept  from  vot- 
ing on  account  of  the  loss  or  absence  of  his  stock  certifi- 
cate (See  §  41),  nor  can  he  be  denied  the  voting  right  be- 
cause his  stock  is  not  fully  paid,  unless  it  is  expressly  so 
provided  by  the  statutes  of  the  state  or  the  charter  of  the 
corporation.^"  (See  §  58.)  A  by-law  provision  restrict- 
ing the  voting  right  is  not  ordinarily  effective.  A  cor- 
poration cannot  vote  on  its  own  stock,  whether  held  in 
the  name  of  the  corporation  or  a  trustee  for  the  corpora- 
tion. Any  sale  or  issue  of  stock  made  by  the  directors  to 
control  an  election  can  usually  be  stopped  by  injunction 
or  the  courts  may  be  invoked  to  set  the  election  aside. 

The  inspectors,  tellers  or  other  officers  conducting  an 
election  have  no  authority  to  refuse  the  vote  of  any  stock- 
holder of  record,  nor  the  right  to  receive  the  vote  of  any 
one  who  is  not  a  stockholder  of  record.  Even  when 
grounds  for  so  doing  exist,  the  courts  alone  can  go  be- 
hind the  corporate  records  and  enjoin  stockholders  of 
record  from  voting,  or  set  aside  an  election  carried  by  the 
vote  of  such  stock.  The  secretary  or  chairman  of  the 
meeting  has  no  authority  to  decide  who  may  vote,  the 
matter  resting  with  the  tellers  or  other  persons  conduct- 
ing the  election,  who  must  be  governed  by  the  stock  books 
of  the  corporation. 

Under  the  general  rule  in  regard  to  voting  at  elec- 

»» Downing   v.    Potts,    23    N.   J.    L.    66    (1851);    People   v.    Albany,    etc.    R.    R.,    55 
Barb.  344,  386   (1869);  Am.,  etc.  Co.  v.   State  Board,  56  N.  J.  h.  389   (1894). 


ANNUAI,  MEETING  OF  STOCKHOLDEIRS.  131 

tions,  a  stockholder  is  entitled  to  one  vote  for  each  direc- 
tor to  be  elected,  for  each  share  of  stock  standing  in  his 
name  on  the  books  of  the  corporation.^^  (See  §  60.)  If 
there  are  any  variations  of  this  usual  rule,  such  as  cumu- 
lative voting,  classified  voting,  or  restriction  of  voting  to 
one  class  of  stock,  such  variation  should  be  stated  as 
clearly  as  possible  in  the  charter  or  by-law^s  of  the  cor- 
poration and  must,  as  a  matter  of  course,  conform  to  the 
requirements  of  any  state  statutes  on  the  subject. 

Cumulative  Voting.  The  usual  method  of  voting  for 
directors  results  in  the  election  of  the  entire  board  of  di- 
rectors by  those  holding  a  majority  of  the  stock.  The 
cumulative  system  of  voting  is  a  modification  of  this  usual 
method  v^hereby  representation  on  the  board  may  be 
secured  by  the  minority.  Under  it,  while  each  share  still 
has  as  many  votes  as  there  are  directors  to  be  elected,  and 
these  votes  may  be  cast  one  for  each  candidate  as  before, 
all  of  these  votes,  if  so  desired,  may  be  cast  for  one  can- 
didate or  may  be  divided  among  any  or  all  of  the  candi- 
dates as  the  stockholder  sees  fit.  Thus  if  five  directors 
are  to  be  elected,  a  stockholder  owning  one  share  of  stock 
may,  under  the  cumulative  system,  cast  one  vote  for  each 
of  five  candidates  but,  if  he  prefers,  may  cast  five  votes 
for  one  candidate,  or  two  votes  for  one  and  three  for  an- 
other, or  divide  his  five  votes  among  the  candidates  in  any 
other  way  he  sees  fit. 

The  practical  result  of  this  modification  of  the  usual 
system  is  to  ensure  minority  representation  whenever  the 
minority  holding  of  stock  is  at  all  material.  Thus  if  a 
corporation  has  one  hundred  shares  of  stock  outstanding 
and  five  directors  are  to  be  elected,  a  stockholder  owning 
or  controlling  forty-nine  shares  of  this  stock  would  not 
under  the  usual  system  be  able  to  elect  a  single  director. 
Under  the  cumulative  system  he  could  infallibly  elect  two 

«  2  Cook  on  Corp.,  $  609;  State  v.  White,  42  Conn.  560  (1875), 


132  stockholde;rs. 

directors.  Or  if  he  controlled  but  thirty-four  shares,  he 
could  still  elect  the  same  number  of  directors.  If  he  con- 
trolled but  seventeen  shares  he  would  still  be  able  to  elect 
one  member  of  the  board. 

The  calculation  is  simple.  As  each  stockholder  is  en- 
titled to  one  vote  on  each  of  his  shares  for  each  of  the  five 
directors  to  be  elected,  this  gives  him  five  votes  for  each 
share  held,  or  eighty-five  votes  for  his  seventeen  shares. 
The  remaining  stock — eighty-three  shares — if  under  one 
control,  gives  a  total  of  four  hundred  and  fifteen  votes 
opposed.  If  then  the  eighty-five  votes  of  the  minor- 
ity stockholder  are  cast  for  one  candidate,  no  possible 
combination  of  the  opposing  four  hundred  and  fifteen 
votes  can  defeat  him. 

In  a  number  of  states  cumulative  voting  is  prescribed 
either  by  the  constitution  or  statutes.  In  many  other 
states  the  statutes  permit  it  but  leave  its  adoption  optional 
with  the  corporation.  In  any  state  where  the  statutes  are 
not  directly  or  indirectly  prohibitive,  cumulative  voting 
may  be  secured  by  proper  provision  in  the  charter  or  by- 
laws of  the  corporation. 

Under  the  system  of  cumulative  voting,  it  is  never  pos- 
sible for  the  minority  stockholders  to  control,  provided 
the  majority  act  together  intelligently.  It  may  be  said, 
however,  that  when  it  is  employed  the  majority  should 
understand  its  workings,  or  otherwise  unexpected  results 
may  ensue.  If  the  majority  scatter  their  votes,  while  a 
strong  minority  combine,  it  would  be  entirely  within  the 
realm  of  possibility  for  this  minority  to  gain  control  of  the 
board. 

The  board  representation  secured  to  the  minority  in- 
terests by  cumulative  voting  is  a  very  material  advantage, 
enabling  them  to  keep  in  touch  with  the  operations  of  the 
company  and  informed  as  to  any  proposed  action  of  the 
board.  The  minority  cannot  interfere  with  or  prevent 
any  proper  action,  but  if  these  actions  are  objectionable 


ANNUAL  MEETING  OF  STOCKHOLDERS.  133 

to  them,  they  are  informed  in  advance  and  may  use  such 
restraining  influence  as  they  can.  If  improper  actions  are 
proposed,  they  may  prevent  them  by  legal  interference. 

§  92.     Other  Business. 

The  consideration  of  any  unfinished  business  follows 
the  election  of  directors.  This  includes  any  matters  which 
were  under  consideration  but  not  disposed  of  at  any  prior 
stockholders'  meetings,  whether  regular  or  special.  Mat- 
ters referred  to  committees  for  consideration,  or  investi- 
gation, or  report  come  under  this  head  and  may  be  acted 
upon  at  this  time. 

The  secretary  usually  brings  up  any  matters  of  un- 
finished business  but  the  stockholders  or  the  chairman 
himself  may  properly  call  them  to  the  attention  of  the 
meeting. 

If  there  is  no  unfinished  business  or,  otherwise,  upon 
its  disposal,  the  presiding  officer  passes  on  to  the  next 
order  of  business  and  enquires  if  there  is  any  new  business 
to  be  brought  before  the  meeting.  Under  this  head  come 
any  matters  requiring  the  attention  of  the  meeting  not 
before  considered.  These  may  be  brought  up  either  by 
the  officials  of  the  meeting  or  by  any  of  the  stockholders 
present. 

§  93.     Adjournment. 

After  the  disposal  of  any  new  business  brought  before 
the  meeting,  adjournment  is  in  order.  This  may  be  by 
motion.  Usually,  however,  when  this  point  is  reached  the 
chairman  enquires  if  there  is  any  other  business  before 
the  meeting,  and  if  no  response  is  received,  declares  the 
meeting  adjourned.  Such  adjournment  is  sine  die,  i.  e. 
final. 

If  the  business  of  the  meeting  cannot  be  completed  ar 


134  STOCKHOLDERS. 

the  one  session,  or  if  any  other  reasons  render  its  con- 
tinuation desirable,  it  is  not  adjourned  sine  die,  but  to  such 
convenient  future  date  as  may  be  decided  upon.  An  ad- 
journment of  this  kind  is  usually  by  motion,  but  if  it  is 
obviously  desirable  or  advisable,  the  chairman  might 
properly  adjourn  the  meeting  himself,  merely  announcing: 
"If  there  is  no  objection,  the  meeting  stands  adjourned 
until  ." 

Adjournment  may  only  be  made  by  consent  of  a  ma- 
jority of  those  present,  and  the  chairman  has  no  power  to 
declare  a  meeting  adjourned  in  defiance  of  this  majority. 
If  he  does  so  notwithstanding,  any  stockholder  may  de- 
mand a  vote,  and,  if  this  vote  is  against  adjournment  or 
if  the  chairman  should  decline  to  put  the  matter  to  vote, 
a  majority  of  the  stockholders  may  remain  and  continue 
the  meeting,  electing  a  new  chairman  if  necessary,  and 
even  adjourning  to  another  room.^^ 

If  the  meeting  adjourns,  the  adjourned  meeting  is  re- 
garded as  a  continuation  of  the  original  meeting  and  need 
not  therefore  be  again  notified  to  the  stockholders.  If 
the  adjournment  is  for  more  than  a  few  days,  however,  it 
is  always  proper  for  the  secretary  to  send  out  notice  of 
the  adjourned  meeting  a  reasonable  time  before  it  con- 
venes. 

As  an  adjourned  meeting  is,  from  a  legal  standpoint, 
merely  a  continuation  of  the  original  meeting,  the  same 
officers  preside  and  any  business  that  might  have  been 
transacted  at  the  first  meeting  may  be  acted  upon  at  its 
adjournment,  or  at  any  adjournment  from  an  adjourned 
meeting.^^ 

§  94.     Signing  Minutes. 

As  soon  after  the  meeting  as  convenient  and  while  its 


"State  V.   Cronan,  23  Nev.  437   (1897) 

"People  V.   Bal  ■    '         -- 

104  CaL  649  (1894) 


»»  People  y.   Batchelor,  22   N.    Y.   128    (1«60);   People't  Bank  v.    Superior  Court, 


ANNUAL  MEETING  OE  STOCKHOIvDERS.  135 

details  are  fresh  in  his  mind,  the  secretary  should  write 
up  its  proceedings  in  the  minute  book  and  sign  them  with 
his  name  and  official  designation.  The  presiding  officer, 
also,  usually  affixes  his  signature. 

The  minutes  are  the  legal  evidence  of  the  proceed- 
ings of  the  meeting,  and  this  double  signature  is  of  ad- 
vantage in  event  of  any  dispute  as  to  the  accuracy  of  the 
record.  (See  Ch.  XXXIII,  "Minutes  of  Corporate  Meet- 
ings.") 


CHAPTER  XI. 
STOCKHOLDERS'   SPECIAL  MEETINGS. 


§  95*     Special  Meetings  of  Stockholders. 

"Special"  or  "called"  meetings  are  held  when  matters 
demanding  the  attention  of  the  stockholders  arise  in  the 
interim  between  annual  meetings.  As  in  the  case  of  an- 
nual meetings,  special  meetings  of  stockholders  must  be 
held  within  the  state  in  which  the  corporation  was  or- 
ganized, unless  otherwise  expressly  permitted  by  statute 
or  charter  provision,  and  usually  at  the  principal  ofBce 
of  the  corporation.  Statutory  provisions  regarding  spe- 
cial meetings  are  found  in  a  number  of  states.  These 
mainly  relate  to  the  method  of  calling  or  notifying  such 
meetings. 

Special  meetings  differ  from  the  annual  meeting  in  the 
following  important  details:  (i)  They  must  be  author- 
ized by  a  more  or  less  formal  call.  (2)  Notice  of  the 
time,  of  the  place  and  of  all  business  to  be  transacted  at 
the  meeting  must  be  given  each  stockholder  of  record. 
(3)  No  other  business  save  that  so  notified  may  be  trans- 
acted at  the  meeting. 

The  formalities  of  special  meetings  must  be  strictly 
observed,  or  action  taken  thereat  may  be  invalidated. 
They  may,  however,  be  waived  by  consent  of  every  in- 
terested party,  either  formally  expressed  in  writing,  or  in- 
dicated by  their  presence  at  and  participation  or  acquies- 
cence in  the  meeting.     (See  §§  96,  98;  also  Forms  32,  33, 

39) 

136 


STOCKHOIvDERS'   SPECIAL   MEETINGS.  137 

§  g6.     Call  for  Meeting. 

The  time  and  place  of  special  meetings  cannot,  from 
the  nature  of  the  case,  be  prescribed  by  the  by-laws  and 
hence  each  meeting  must  be  formally  called  as  the  neces- 
sity arises.  The  manner  of  this  call  is  sometimes  pre- 
scribed by  statute  or  charter  but  is  usually  left  for  the  by- 
laws. If  neither  the  statutes,  charter  nor  by-laws  pre- 
scribe the  manner  of  calling  special  meetings  of  stock- 
holders, the  directors  may  always  do  so  by  resolution,^  or 
the  stockholders  may  unite  in  calling  a  meeting,  which, 
provided  the  number  joining  in  the  call  represents  a  fair 
proportion  of  the  outstanding  stock  and  the  time  and 
place  is  reasonable,  will  be  legal.     (See  Form  47.) 

Ordinarily  the  by-laws  provide  that  special  meetings 
may  be  called  in  any  one  of  four  ways:  (i)  By  written 
call  signed  by  the  president  (See  Forms  40,  41);  (2)  by 
resolution  of  the  directors  (See  Form  44) ;  (3)  by  written 
call  signed  by  two  or  more  directors  (See  Forms  42,  43)  ; 
(4)  by  written  or  published  call  subscribed  by  a  specified 
number  of  stockholders,  or  a  certain  proportion  of  the 
outstanding  stock,  usually  ranging  from  one-third  to  a 
majority.     (See  Forms  45-47.) 

The  call  and  notice  for  a  special  meeting  must  state  its 
time,  place  and  purpose.^  These  essentials  every  stock- 
holder is  entitled  to  know,  and  the  omission  of  any  one 
might  invalidate  the  entire  action  of  the  meeting.  No 
business  except  that  which  has  been  specified  in  the  call  and 
in  the  notice  which  follows  the  call,  can  be  legally  transacted  at 
a  special  meeting}  To  end  the  call  or  notice,  as  is  fre- 
quently done,  with  some  general  phrase,  such  as  "and  all 
other  matters  that  may  come  before  such  meeting,"  does 
not  add  to  the  scope  of  the  meeting  in  any  way  and  does 

1  Commonwealth  v.   Smith,   45   Pa.    St.   59    (1863);    Stebbins  v.   Merritt,   64   Mass. 
27  (18S2);  Cassell  v.  Lexington,  etc.  Co.,  9  S.  W.  Rep.  502  (1888). 
»  2  Cook  on  Corp.,  §  595. 
•  Clark  &  Marshall  on   Corp.,   §   647. 


138  STOCKHOIvDERS. 

not  in  itself  legally  authorize  the  consideration  of  any- 
thing/ 

Where  a  company  with  but  few  stockholders  is  to  be 
assembled  in  special  meeting,  time  may  be  saved  by  em- 
ployment of  the  combined  call  and  waiver  of  notice.  (See 
Form  39).  This  requires  the  signature  of  every  stock- 
holder to  make  it  effective,  but  the  meeting  so  authorized 
may  be  held  at  once,  and,  if  so  agreed,  any  business  with- 
in the  powers  of  the  stockholders  may  be  transacted  there- 
at. A  provision  in  a  duly  signed  call  and  waiver  for  the 
"transaction  at  such  meeting  of  any  and  all  business  per- 
taining to  the  affairs  of  the  company,"  is  effective,  since 
everyone  interested  has  agreed  thereto.^  (See  §  98;  also 
Ch.  XXVIII,  "Calls  and  Waivers.") 

The  first  meeting  of  stockholders  is  merely  a  form  of 
special  meeting  and  is  usually  assembled  by  call  and 
waiver  signed  by  all  those  entitled  to  be  present.  (See 
Forms  32,  33.) 

§  97.     Notice  of  Special  Meeting. 

The  call  for  a  special  meeting  must  not  be  confused 
w^ith  the  notice  of  such  a  meeting.  The  call  is  the  written 
authority  or  instructions,  usually  handed  or  sent  to  the 
secretary,  pursuant  to  which  the  meeting  is  to  be  as- 
sembled. (See  Forms  40-47.)  The  notice,  on  the  other 
hand,  is  the  actual  statement  of  the  time,  place  and  pur- 
poses of  the  meeting,  sent  out  to  the  stockholders  usually 
by  the  secretary,  in  obedience  to  the  instructions  of  the 
call  and  in  accordance  with  its  terms.     (See  Forms  52- 

54.) 

The  notice  of  a  special  meeting  must  state  the  three 
essential  elements  of  time,  place  and  purpose.*^  These 
must  accord  with  the  specifications  of  the  call.     If  there  is 

•  1  Morawetz  on  Corp.,  S  482;  People's  Ins.  Co.  v.  Westcott,  80  Mass.  440  (1860). 

•  Cook  on  Corp.,  §  599. 

•  1   Morawetz  on  Corp.,  $  482. 


STOCKHOI^DERS"   SPECIAI,   MEETINGS.  139 

any  material  difference  as  to  these  between  the  call  and 
the  notice,  the  meeting  is  invalidated  thereby.  The  time 
means  both  the  day  and  the  hour.  No  business  other  than 
that  specified  in  the  notice  may  be  transacted  at  a  special 
meeting.  (See  §  lOO.)  If  one  single  stockholder  is  not 
properly  notified,  he  may  be  able  to  set  the  entire  pro- 
ceedings of  the  meeting  aside. 

When,  as  is  usually  the  case,  notice  of  a  special  meet- 
ing must  be  sent  by  mail  to  the  "last  known  address"  of 
each  stockholder,  or  to  his  "address  as  it  appears  on  the 
books  of  the  corporation,"  the  secretary  must  be  prepared 
to  make  affidavit,  if  necessary,  that  this  has  been  done. 
If  no  special  method  of  service  or  publication  is  prescribed 
by  the  statutes,  the  by-laws  or  other  corporate  regula- 
tion, the  secretary  must  himself  or  by  deputy  give  per- 
sonal notice  by  placing  a  copy  of  the  notice  in  the  hands 
of  each  stockholder.^  If  no  time  is  prescribed,  notice  must 
be  served  a  "reasonable  time  before  the  meeting."^ 
When  notice  is  required  to  be  given  a  certain  number  of 
days  before  the  meeting,  the  time  should  be  counted  ex- 
clusive of  the  day  of  notice  and  the  day  of  meeting,  though 
in  New  York  by  statute  provision  but  one  of  these  days 
need  be  excluded. 

If  the  secretary  refuses  to  give  proper  notice  of  a  spe- 
cial meeting  after  it  has  been  duly  called,  anyone  inter- 
ested may  send  out  the  notice,  and  such  notice,  if  in  due 
form  and  properly  served  on  each  stockholder,  will  be 
effectual. 


§  98.     Consent  Meetings. 

Special  meetings  of  stockholders  may  be  assembled  at 
any  time  without  the  usual  call  and  notice  if  all  interested 

'  Stebbins  et  al.,  Admrs.  v.  Merritt  et  al..  64  Mass.  27  (1852) ;  Tuttle  v.  Mich.  Air 
Une  R.  R.  Co.,  35  Mich.  247   (1877). 

*Re  I<ong  Island  Railroad,  19  Wend.  37  (1837);  Covert  v.  Rogers,  38  Mich.  363 
(1878). 


140  STOCKHOLDERS. 

sign  a  formal  waiver  thereof.^  Also,  if  without  any  such 
waiver,  all  the  stockholders  assemble  in  meeting,  no  matter 
how  called  or  whether  called  at  all,  it  is  termed  a  "consent 
meeting,"  and,  all  present  acquiescing,  any  business  with- 
in the  stockholders'  powers  may  be  transacted  thereat.^" 
Those  present  and  participating  in  such  meeting  are 
thereby  estopped  from  later  objection  to  any  informality 
of  call  or  notice,  and  as  all  concerned  are  present,  no  one 
is  left  who  has  a  right  to  object. 

When  consent  meetings  are  held,  it  is  important  that 
the  minutes  shall  show  the  presence  of  every  stockholder. 
Also  if  the  action  taken  is  important,  it  is  always  advis- 
able that  every  person  present  shall  either  sign  the  min- 
utes, which  is  the  most  effective  evidence  of  attendance 
and  acquiescence,  or  otherwise  sign  a  waiver  of  the  usual 
formalities.     (See  Form  49.) 

In  a  small  or  close  corporation  consent  meetings  can 
readily  be  assembled  and  are  the  rule  when  special  meet- 
ings are  necessary.  In  the  larger  corporations  such  meet- 
ings are  in  most  cases  obviously  impossible. 


§  99.     Opening  Formalities. 

The  procedure  for  opening  a  special  meeting  is  the 
same  as  in  the  case  of  the  annual  meeting.  (See  §§  83, 
84.)  The  alphabetical  list  of  stockholders  required  by 
statute  in  some  of  the  states  at  the  annual  meeting  of 
stockholders,  is  not  required  at  special  meetings  unless  di- 
rectors are  to  be  elected. 

The  proof  of  proper  call  and  notice  of  the  meeting  fol- 
lows the  roll-call.  The  secretary  should  present  the  orig- 
inal duly  signed  call;  also  a  copy  of  the  notice  sent  out 
pursuant  to  the  call,  with  his  certificate  attached  showing 

•3  Clark  &  Marshall  on  Corp.,  8  647,  note  278. 

I'Handley  v.  Stutz,  139  U.  S.  417  (1890);  Warner  v.  Mower,  11  Vt.  385  (1839); 
Columbia  Nat.  Bank  v.  Mathews,  85  Fed.  Rep.  934  (1898);  In  re  Griffing  Iron  Co., 
53  N.  J.  L.  168  (1898);  Aff'd  63  N.  J.  h.  357  (1899). 


stockholders'  special,  meetings.  141 

that  the  notice  was  properly  addressed  and  mailed  to  each 
stockholder  the  necessary  number  of  days  before  the  date 
of  the  meeting.  The  call  and  notice  may  be  ordered  re- 
ceived and  filed  as  in  the  case  of  a  regular  meeting,  or,  as 
the  validity  of  the  meeting  is  dependent  upon  its  due  as- 
sembling evidenced  by  the  call  and  notice,  they  may  very 
properly  be  ordered  spread  upon  the  minutes. 

If  the  meeting  has  been  assembled  by  call  and  waiver 
signed  by  all  the  stockholders  of  the  company,  this  instru- 
ment should  be  presented  to  the  meeting  and  may  be 
properly  included  by  the  secretary  in  his  minutes  without 
instruction. 


§  100.     Special  Business. 

Minutes  of  previous  stockholders'  meetings  cannot 
properly  be  approved  at  a  special  meeting  unless  so  pro- 
vided in  the  call  and  notice  or  other  authorization  of  the 
meeting,  nor  can  any  other  business  be  transacted  save 
that  so  specified. ^^  Hence  the  particular  business  for 
which  the  meeting  was  called  should  be  taken  up  at  once. 
The  presiding  officer,  or  at  his  request  someone  present, 
states  the  purposes  of  the  meeting  and  makes  such  ex- 
planations as  may  be  necessary.  Or  the  presiding  officer 
may  call  upon  the  secretary  to  read  the  notice  of  the  meet- 
ing in  which  its  purposes  are  set  forth  and  then  call  upon 
someone  familiar  with  the  matter  to  explain  it  to  the  stock- 
holders. After  such  statement  and  explanation  and  any 
desired  discussion,  someone  interested  usually  presents 
and  moves  the  adoption  of  a  resolution  covering  the  mat- 
ter. The  meeting  may  then,  at  its  discretion,  dispose  of 
this  resolution  in  any  parliamentary  way. 

"Warner  v.  Mower,  11  Vt.  385  (1839);  People's  Mut.  Ins.  Co.  v.  Westcott,  80 
Mass.  440  (1860);  Atlantic  De  Laine  Co.  v.  Mason,  S  R.  L,.  463  (1858);  Mutual,  etc. 
Co.  V.  Farquhar,  86  Md.   668    (1898). 


142  STOCKHOI<DSRS. 

§  1 01.     Adjournment. 

As  already  stated,  no  business  of  any  kind  may  be 
transacted  at  a  special  meeting  save  that  specifically  au- 
thorized. As  soon,  therefore,  as  the  particular  business 
for  which  the  meeting  was  called  is  disposed  of,  nothing  is 
left  but  adjournment.  This  may  be  by  motion,  or,  if  no 
one  objects,  the  president  may  merely  state  that  "no  fur- 
ther business  being  before  the  meeting,  it  stands  ad- 
journed," 

A  special  meeting  may  be  adjourned  to  another  day 
just  as  may  an  annual  meeting,  and  at  the  adjourned  meet- 
ing any  business  set  forth  in  the  notice  for  the  original 
meeting  may  be  considered.  New  business  cannot,  how- 
ever, be  introduced  or  considered.  No  notice  of  an  ad- 
journed meeting  is  necessarily  sent  to  stockholders.  (See 
§  93.) 


PART  IV.— DIRECTORS  AND  OFFICERS. 


CHAPTER  XII. 
THE  BOARD  AND  ITS  MEMBERSHIP. 


§ .  102.     Functions  and  Action  of  the  Board. 

The  board  of  directors  is  the  managing  body  of  the  cor- 
poration. Unless  otherwise  expressly  provided  by  charter 
or  by-law  provision,  it  has  the  entire  management  and  con- 
trol of  the  corporate  property  and  affairs.^  It  acts  through 
agents,  who  are  usually  the  officers  of  the  corporation. 

In  exercising  its  appointed  powers,  the  directors  must 
act  as  a  board  in  duly  assembled  meeting  with  a  quorum 
present,^  and  their  action  is  expressed  by  means  of  motions 
and  resolutions,  which,  though  differing  in  form,  are  of  the 
same  legal  effect.    (See  Ch.  XXXI.) 

§  103.     Action  Without  Meeting. 

It  is  only  as  a  body  in  lawful  meeting  assembled  that 
the  directors  have  authority  to  act  and  bind  the  corpora- 
tion.^ The  separate  assent  of  every  one  of  the  directors  to 
a  measure  is  of  no  legal  force.  It  frequently  happens,  how- 
ever, that  important  corporate  action  is  authorized  by  mere 
informal  conference  between  members  of  the  board,  or  at 
times  by  written  agreement  signed  by  all  or  a  majority  of 

•Ellerman  v.  Chicago,  etc.  Co.,  49  N.  J.  Eq.  217  (1891);  Sellers  v.  Greer,  172 
111.   549    (1898). 

'Johnston  v.  Jones,  23   N.  J.  Eq.   216    (1872). 

•7n  re  St.  Helen  Mill  Co.,  3  Sawy.  92  (1874);  Gashwiler  v.  Willis,  33  Cal.  11 
(1867). 

143 


144  DIRECTORS  AND  OI^FICERS. 

the  members  of  the  board.  Such  authorization  is  in  itself 
absolutely  ineffective,'*  though  it  may  be  ratified  at  any 
subsequent  duly  assembled  directors'  meeting,  and  then  be- 
comes the  lawful  action  of  the  board. 

In  Nevada,  by  express  statute  provision,  action  by  a 
majority  of  the  directors  without  a  legally  called  meeting, 
IS  valid  if  afterwards  assented  to  in  writing  by  all  the  other 
members  of  the  board. 

§  104.     Number. 

The  statutes  usually  impose  general  limitations  as  to 
the  number  of  members  constituting  the  board  of  direc- 
tors. The  exact  membership  within  these  limits  must,  in 
a  majority  of  the  states,  be  fixed  by  charter  provision; 
elsewhere  by  the  by-laws.  In  many  of  the  states  the  stat- 
utes merely  prescribe  a  minimum  number  of  directors, 
ranging  from  two,  as  in  Washington,  up  to  five,  as  in  Illi- 
nois, Ohio,  Tennessee,  and  the  Philippines.  The  most 
common  minimum  is  three.  Maximum  limitations  are  also 
found  in  many  states,  ranging  from  nine,  as  in  South  Caro- 
lina, to  thirty,  as  in  Ohio.  In  West  Virginia  a  fixed  board 
of  five  members  is  prescribed  unless  otherwise  provided 
by  the  by-laws.  In  a  few  states  no  statute  provisions  as 
to  number  are  found,  the  whole  matter  being  left  to  the 
discretion  of  the  incorporators  or  stockholders  as  the  case 
may  be.  An  odd  number  is  usually  selected,  as  three,  seven 
or  thirteen,  in  order  to  avoid  tie  votes. 

To  change  the  number  of  directors  is  usually  a  matter 
of  difficulty,  requiring  an  amendment  of  the  charter.  In 
some  of  the  states,  however,  the  number  is  fixed  by  the  by- 
laws, and  may  be  changed  by  their  mere  amendment. 
When  the  membership  of  the  board  is  increased  in  the  in- 
terim between  annual  meetings,  the  stockholders  elect  the 

*Peirce  v.  Morse-Oliver,  etc.  Co.  94  Me.  406  (1900);  People's  Bank  v.  St.  An- 
thony's, etc.  Church,   109  N.  Y.   512   (1888). 


THE   BOARD   AND    ITS    MEMBERSHIP.  145 

additional  members  to  hold  for  the  balance  of  the  year, 
unless  otherwise  expressly  provided  by  statutes,  charter, 
or  stockholders'  by-laws.^ 

§  105.     Qualifications. 

The  only  qualification  required  of  a  director  under  the 
common  law  is  the  ability  to  act  as  an  agent.  Additional 
qualifications  are,  however,  frequently  imposed,  either  by 
the  statutes  of  the  state,  or  by  the  charter  or  by-laws  of 
the  corporation.  The  statutory  requirements  almost  inva- 
riably relate  to  residence  or  to  the  holding  of  stock  by 
directors.  Charter  and  by-law  provisions  usually  relate  to 
the  amount  of  stock  that  must  be  held. 

§  106.     Residential  Qualifications. 

Residential  qualifications  for  directors  are  imposed  in 
perhaps  the  majority  of  the  states  of  the  Union.  Com- 
monly one  member  must  be  a  resident  of  the  state  of  in- 
corporation ;  in  the  Philippines  and  Vermont,  two  must  be 
residents;  in  Kansas  and  Missouri,  three;  in  Pennsylvania 
and  Oklahoma,  one-third  of  the  total  number;  while  in 
California,  Ohio,  and  Alaska,  a  majority  of  the  board  must 
be  residents.  In  Indiana  all,  and  in  Washington  a  majority 
of  the  directors  must  be  citizens  of  the  United  vStates. 

It  may  be  said  that  there  is  some  doubt  as  to  whether 
any  of  the  statutory  requirements  as  to  residence  of  direc- 
tors are  of  legal  force. ^  The  directors  act  as  agents  or  trus- 
tees of  the  stockholders,  and  it  is  questionable  whether  the 
state  can  restrict  the  stockholders'  choice  by  imposing  resi- 
dential requirements. 

§  107.     Stockholding  Qualifications. 

In  most  of  the  states  the  statutes  expressly  prescribe 

•7n  re  Griffing  Iron  Co.,  63  N.  J.  L.  168  (1899). 

•2  Cook  on  Corp.,  §  623;  Farmers'  L,.  &  T.  Co.  v.  Chicago,  etc.  Ry.,  27  Fed. 
Rep.  146  (1886);  Shirk  v.  City  of  La  Fayette,  52  Feb.  Rep.  857  (1892);  Roby,  Trus- 
tee V.  Smith  et  al.,  131  Ind.  342  (1891). 


146  DIRECTORS  AND  OI^IflCERS. 

that  directors  shall  be  stockholders.  In  some  few  states  a 
minimum  holding  is  prescribed,  but  usually  the  ownership 
of  a  single  share  of  stock  is  sufficient. 

In  New  Jersey  and  some  few  other  states,  a  director 
must  hold  stock  of  the  corporation  at  the  time  he  is 
elected.^  As  a  rule,  however,  the  election  of  a  person  not 
a  stockholder  is  effective  if  he  acquires  stock  before  acting 
as  a  director.^  Where  a  corporation  holds  stock  of  another 
company,  any  of  its  directors  or  officers  may,  as  its  repre- 
sentatives, be  elected  directors  of  this  other  company, 
though  personally  owning  no  stock. ^ 

When  directors  are  required  to  hold  stock,  and  a 
"dummy"  director  is  to  be  elected,  or  some  person  is  de- 
sired as  a  director  who  does  not  own  the  necessary  stock, 
and  is  not  able  or  does  not  care  to  purchase  it,  the  usual 
plan  is  to  assign  to  him  the  requisite  amount.  Sometimes 
this  assigned  stock  is  given  outright  in  return  for  the  ser- 
vices to  be  rendered.  Frequently,  however,  this  is  not  de- 
sired. In  such  case  a  certificate  of  stock  is  actually  issued 
to  the  proposed  director,  or  director-elect,  as  the  case  may 
be,  and  he  is  entered  on  the  stock  books  as  a  stockholder  of 
record.  He  is  then  required,  however,  to  endorse  his  cer- 
tificate, usually  in  blank,  and  hand  it  back  to  the  original 
owner,  who  then  again  becomes  the  owner  in  fact  of  the 
stock  it  represents.  This  last  certificate  is  not,  however, 
turned  in  for  cancellation,  and  so  long  as  this  condition  con- 
tinues the  director  is  technically  the  owner  of  the  stock, 
and  is  qualified  to  act.^°  If,  however,  the  real  owner  of  the 
stock  surrenders  the  endorsed  certificate,  the  stock  it  rep- 
resents is  credited  to  him  on  the  corporate  books,  and  a 
new  certificate  is  issued  in  his  name.  This  terminates  the 
technical  ownership  of  stock  by  the  "dummy"  director,  and 
Ipso  facto  his   directorship.     Wherever   directors   are   re- 

"•  Re  St.  Lawrence  Steamboat  Co.,  44  N.  J.  L.  529  (1882). 
"Greenough  v.  Ala.,  etc.  R.  R.  Co.,  64  Fed,  Rep.  22  (1894). 
•Wight  V.   Springfield,  etc.  R.  R.,  117  Mass.  226   (1875). 

^"Re  St.  Lawrence  Steamboat  Co.,  44  N.  T.  L.  529  (1882);  Re  Leslie,  58  N.  J.  L- 
609   (1896);  In  re  Argus  Printing  Co.,  1  N.  D.     434   (1891). 


THE   BOARD   AND   ITS   MEMK£RSHIP.  147 

quired  to  be  stockholders  the  transfer  of  a  director's  stock 
on  the  books  of  the  company  terminates  his  de  jure  direc- 
torship.^^ 

When  the  first  directors  are  named  in  the  certificate  of 
incorporation,  as  in  New  York,  North  Dakota,  Montana, 
and  a  number  of  other  states,  these  first  directors  need  not 
be  stockholders,  even  though  the  statutes  prescribe  a  stock- 
holding qualification.-^^ 

§  1 08.     Compensation  of  Directors. 

Unless  otherwise  provided  in  the  charter  or  by-laws, 
directors  are  not  entitled  to  compensation  for  their  ser- 
vices as  directors.  They  are  supposed  to  be  working  for 
the  general  welfare  of  the  corporation,  and  not  in  expec- 
tation of  receiving  personal  compensation.^^  This  is  a 
matter  of  common  law,  re-enacted  by  the  statutes  in  sev- 
eral of  the  states.  In  Colorado  a  director  is  not  entitled 
to  compensation  for  services  as  such,  unless  such  compen- 
sation is  expressly  provided  for  or  sanctioned  by  the  char- 
ter.^"^  Even  where  a  director  performs  services  outside 
of  those  ordinarily  pertaining  to  the  position,  the  ten- 
dency of  the  courts  is  to  hold,  in  the  absence  of  express 
agreement  otherwise,  that  they  are  undertaken  through 
zeal  for  the  company's  welfare  rather  than  through  ex- 
pectation of  direct  remuneration.^^ 

While  directors  do  not  usually  receive  any  salary  or 
compensation  for  their  services,  an  inducement  for  at- 
tendance at  meetings  is  commonly  offered  by  the  larger 
corporations  in  the  shape  of  a  director's  fee  or  allowance, 
prescribed  by  the  by-laws  and  usually  ranging  from  five 

"Chemical  Nat.  Bank  v.  Colwell,  132  N.  Y.  250  (1892);  Beardsley  v.  Johnson 
et  al.,  121  N.  Y.  224  (1890). 

"Hamilton  Trust  Co.  v.  Clemes,  163  N.  Y.  423  (1900);  Camden,  etc.  Trust  Co. 
V.  Burlington,  etc.  Co.,  33  Atl.  Rep.  479   (1895). 

"Farmers',  etc.  Trust  Co.  v.  R.  R.,  152  N.  Y.  251,  254  (1897);  Mather  v.  E.  M. 
Co.,  118  N.  Y.  629,  632  (1890). 

>*  Brown  v.  R.  M.  S.  Mines,  17  Colo.  421    (1892). 

"  Stout  V.   Security  Co.,  82  App.  Div.   (N.  Y.)   129   (1903). 


148  DIRECTORS  AND  OFFICERS. 

to  twenty  dollars  for  each  meeting.  This  is  not  earned 
unless  the  director  is  present  at  the  meeting,  and  it  is 
sometimes  prescribed  that  he  must  be  present  "from  roll- 
call  until  adjournment,  unless  sooner  excused." 

The  whole  matter  of  directors'  compensation  for  their 
services  as  directors  is  one  resting  in  the  discretion  of 
the  stockholders,  and  if  they  deem  any  fee  or  compensa- 
tion desirable,  it  should  be  provided  for  in  the  stock- 
holders' by-laws.  Where,  however,  services  clearly  out- 
side those  pertaining  to  his  position,  are  rendered  by  a 
director  he  should  be  paid.  This  is  best  provided  for  in 
the  by-laws,  but,  if  not,  the  board  should  enter  into  an  ex- 
press agreement  for  such  services,  and  the  compensation 
therefor,  before  the  services  are  rendered.  It  is  doubtful 
whether  the  board  can  legally  allow  compensation  to  a  di- 
rector who  is  also  a  stockholder,  for  services  already  ren- 
dered.^^  If  the  director  is  not  a  stockholder  the  rule  does 
not  apply.    (See  §  120.) 


"Brophy  v.  Am.   Brewing  Co.,  211   Pa.   St.   596   (1905);   Klein  v.   Ind.   Brewing 
Assn.,  231  111.  594  (1908). 


CHAPTER  XIII. 
ELECTION  AND  REMOVAL  OF  DIRECTORS. 


§  109.     Appointment  of  Directors. 

Directors  are  usually  elected  each  year  by  the  stock- 
holders at  their  annual  meeting.  (See  §  90.)  In  some 
few  states,  as  in  Colorado  and  Maine,  this  annual  election 
of  directors  is  a  matter  of  statutory  requirement.  In 
most  of  the  states  it  is  merely  a  matter  of  custom,  which 
may  be  regulated  by  the  by-laws  as  the  stockholders  see 
fit.  The  effect  of  a  longer  term  is  sometimes  secured  by 
mere  omission  of  the  annual  election,  the  old  directors 
then  holding  over  until  their  duly  qualified  successors 
are  elected.  (See  §  112.)  If  the  time  and  place  of  elec- 
tion of  directors  is  not  prescribed  by  the  charter  or  stat- 
utes, the  by-laws  should  make  proper  provision  therefor. 

In  some  of  the  states  the  first  directors  are  named  in 
the  charter,  and  their  appointment  is  made  effective  by 
the  allowance  of  that  instrument.  (See  §  107.)  In  the 
other  states  the  first  board  of  directors  is  usually  elected 
by  the  incorporators  at  their  first  meeting.  Every  statu- 
tory requirement  should  be  followed  exactly  in  this  first 
election,  and  the  minutes  should  show  in  detail  that  this 
has  been  done.     (See  Form  37.) 

Speaking  generally,  irregularities  in  procedure  at  an 
election  of  directors,  unless  material,  will  not  be  sufficient 
ground  for  setting  the  election  aside,  provided  it  has  been 

149 


150  DIRECTORS  AND  OI^FICERS. 

conducted    in    good    faith    and    more    regular    procedure 
would  not  have  changed  the  result.^ 

§  no.     Classification  of  Directors. 

In  order  to  prevent  any  sudden  change  of  manage- 
ment, the  board  of  directors  is  sometimes  divided  into 
classes,  one  class  being  elected  each  year.  Such  classifi- 
cation is  seldom  necessary  when  cumulative  voting  (See 
§  60)  prevails,  as  this  in  itself  tends  to  prevent  sudden 
and  radical  changes  of  management.  It  is  also  rarely  ad- 
visable in  the  smaller  corporations. 

The  usual  classification  of  directors  is  their  division 
into  three  as  nearly  equal  classes  as  possible,  each  class 
holding  for  three  years,  and  one  class  being  elected  each 
year.  Under  this  plan  three  years  is  required  for  a  com- 
plete change  of  the  board  membership.  The  three  classes 
are  provided  for  at  the  first  election  of  directors  on  any 
agreed  plan — as,  for  instance,  that  of  the  directors  elected 
those  receiving  the  highest  number  of  votes  shall  consti- 
tute the  first  class  with  a  three  years'  term;  those  receiv- 
ing the  next  highest  number  of  votes  shall  constitute  the 
second  class  with  two  years  of  their  term  to  run,  and 
those  receiving  the  lowest  votes  shall  constitute  the  third 
class,  with  one  year  of  their  term  yet  to  run. 

Classification  of  directors  is  expressly  permitted  by 
statute  in  a  number  of  the  states.  It  may,  however,  be 
obtained  by  proper  charter  or  by-law  provision  in  every 
state  of  the  Union,  save  in  those  few  where  the  statutes 
provide  for  the  annual  election  of  the  entire  board. 

§  III.     Vacancies  on  the  Board. 

The  stockholders  alone  have  power  to  fill  vacancies  on 
the  board,  unless  otherwise  expressly  provided  by  statute, 

^Re  Argus  Printing  Co.,  1  N.  D.  434  (1891);  Re  Mohawk,  etc.  R.  R.,  19  Wend. 
135  (1838);  Union,  etc.  Bank  v.  Scott,  53  N.  Y.  App.  Div.  65   (1900). 


Et^CTlON  AND  REMOVAL  O^  DIRECTORS.  151 

charter  or  by-laws.  Such  vacancies  must  therefore  await 
the  election  of  directors  at  the  next  annual  meeting,  or  be 
filled  by  special  election,  unless  the  power  of  filling  va- 
cancies has  been  conferred  upon  the  board.^  It  is  advisa- 
ble that  the  directors  have  this  power,  and  in  practice  it 
is  almost  invariably  given  them. 

Vacancies  on  the  board  may  be  caused  by  the  death, 
removal,  resignation,  or  disability  of  a  director,  or  the 
failure  of  a  director-elect  to  accept  his  office.^  The  con- 
tinued absence  of  a  director  from  meetings  is  not  itself 
sufficient  to  vacate  his  position.  If  it  is  desired  that  such 
continued  absence  shall  have  this  effect,  the  by-laws 
should  so  provide,  specifying  the  exact  number  of  consec- 
utive absences  from  regular  meetings  or  from  regular  and 
special  meetings  necessary  to  create  a  vacancy. 

A  board  of  directors  may  legally  continue  to  act  in 
spite  of  vacancies,  provided  enough  remain  to  make  up 
a  quorum  of  the  whole  board.  Less  than  a  quorum  of  the 
board  cannot  fill  vacancies  unless  expressly  so  empowered 
by  charter  or  by-laws.     (See  Form  24,  Art  III,  §  i.) 

§  112.     Directors  Holding  Over. 

"If  the  directors  shall  not  be  elected  on  the  day  des- 
ignated in  the  by-laws,  or  by  law,  the  corporation  shall 
not  for  that  reason  be  dissolved;  but  every  director  shall 
continue  to  hold  his  office  and  discharge  his  duties  until 
his  successor  has  been  elected.'"*  This  statement  of  the 
law  taken  from  the  New  York  statutes  is  also  a  statement 
of  the  common  law,  existing  in  practically  every  state  of 
the  Union.^  A  similar  provision  also  usually  appears  in  the 
by-laws. 

^  In  re  Griffing  Iron  Co.,  63  N.  J.  L,.  168,  357  (1899);  3  Thompson  on  Corp.,  S 
3853 

•Whittaker  v.  Amwell  Nat.  Bank,  52  N.  J.  Eq.  400  (1894);  United  Growers  Co. 
V.  Eisner,  22  App.  Div.  (N.  Y.)   1   (1897). 

*Gen.   Corp.   Law,   N.   Y.,  8  23. 

•State  V.  Bonnell,  35  Ohio  St.  10  (1878);  Noble  v.  Euler,  20  Anp.  Div.  (N.  Y.) 
548   (1897);  Manhattan  Co.  v.  Kaldenberg,  165  N.  Y.  1    (1900). 


152  DIRECTORS  AND  O^I^ICERS. 

The  powers  of  directors  who  continue  in  office  because 
of  a  failure  to  elect  their  successors  are  the  same  in  every 
respect  as  before  their  fixed  term  of  office  expired.  They 
are  directors  both  de  jure  and  de  facto,  and  their  acts  are 
valid.^    (See  §  148.) 

The  smaller  corporations  relying  upon  this  condition 
sometimes  omit  the  annual  meeting  with  its  election  of  di- 
rectors for  years,  thereby  avoiding  the  formalities  of  the 
annual  meeting.  In  such  case  the  old  board  holds  over 
indefinitely,  and,  duly  empowered  thereto  by  charter  or 
by-laws,  fills  by  vote  of  its  own  members  any  vacancies 
that  may  occur.  As  long  as  the  stockholders  do  not  pro- 
test, the  practice  is  not  legally  objectionable.  In  New 
York  the  omission  of  the  election  of  directors  for  eight 
years  has  been  upheld.' 

§.113.     Resignation  of  Directors. 

A  director  is  under  no  obligation  to  continue  in  the 
service  of  his  corporation  longer  than  he  desires.  Even 
though  the  statutes  or  by-laws  provide  that  he  shall  con- 
tinue in  office  until  the  end  of  his  term,  he  may  resign 
at  any  time  and  thereby  terminate  his  official  position.^ 

The  effect  of  a  resignation  is  governed  by  its  terms.  It 
may  be  tentative  (See  Form  135),  requiring  acceptance 
by  the  board  before  it  is  effective,  or  peremptory  (See 
Form  137)  and  effective  as  soon  as  delivered  to  the  proper 
representative  of  the  corporation.^ 

The  resignation  should,  for  purposes  of  record  and 
proof,  be  in  writing,  but  an  oral  resignation  properly  pre- 
sented to  the  board  of  directors  and  recorded  in  the  min- 
utes as  so  presented,  is  sufficient.  It  is  obvious,  how- 
ever, that  an  oral  resignation  is  objectionable  on  account 

•2  Cook  on  Corps,  §  713;  Kent  Co.,  etc.  Soc.  v.  Houseman,  81  Mich.  609  (1890). 

'  Geneva  Mineral  Springs  v.  Coursey,  45  App.  Div.   (N.  Y.)   268,  275   (1899). 

•3  Clark  &  Marshall  on  Corp.,  8  667  and  cases  cited;  Fearing  v.  Glenn,  73  Fed. 
Rep.   116   (1896);  Briggs  v.   Spaulding,   141   U.   S.   132   (1890). 

•Manhattan  Co.  v.  Kaldenberg,  165  N.  Y.  1  (1900);  Int.  Bank  v.  Faber,  86  Fed. 
Rep.  443   (1898);  Noble  v.  Euler,  20  N.  Y.  App.  Div.  548  (1897). 


E1,ECTI0N   AND   REMOVAL   OE   DIRECTORS.  153 

of  its  difficulty  of  proof.  A  peremptory  resignation  may 
be  made  effective  at  a  future  date.^°  A  tentative  resigna- 
tion may  fix  a  future  date  on  which  it  will  be  effective  if 
accepted.     (See  Form  138.) 

A  peremptory  resignation  cannot  be  withdrawn  after 
its  formal  presentation  to  the  board,  save  with  the  con- 
sent of  the  board.  A  tentative  resignation  may  be  with- 
drawn at  any  time  before  its  acceptance. 

§  114.     Removal  of  Directors. 

The  directors  have  no  power  to  suspend  or  remove  a 
fellow  member  of  the  board.  The  stockholders  have  a 
common  law  power  to  remove  directors  for  adequate 
cause,  but  such  removals  are  not  frequent.  The  cause 
must  be  good  and  capable  of  proof,  charges  must  be  pre- 
ferred, a  meeting  must  be  called,  and  the  accused  be  given 
a  hearing.  The  whole  procedure  is  troublesome,  and  it 
is  usually  preferable  to  await  the  expiration  of  an  offend- 
ing director's  term  rather  than  to  attempt  his  forcible 
removal  sooner. 

In  some  states,  however,  the  statutes  extend  this  com- 
mon law  power  of  removal,  and  wherever  special  pro- 
visions are  permitted  in  the  charter,  the  same  end  may  be 
attained  by  proper  charter  provision.  When  thus  given 
by  the  statutes  or  charter,  the  power  of  removal  is  usually 
summary,  i.  e.,  an  objectionable  director  may  be  removed 
by  prescribed  procedure — usually  by  a  two-thirds  vote  of 
the  stock,  but  in  a  few  states  by  a  bare  majority — at  once 
and  with  or  without  cause.  Under  these  circumstances 
the  removal  of  directors  is  more  frequent. 

When  the  office  of  director  has  been  usurped  or  is  un- 
lawfully held,  and  is  claimed  by  a  party  who  is  not  in 
possession,  quo  zvarranto  will  lie,  or  an  equitable  action  for 
possession  may  be  instituted." 

"Van  Amburgh  v.  Baker,  81  N.  Y.  46  (1880). 

"Powers  V.  Blue,  etc.  Assn.,  86  Fed.  705  (1898);  Commonwealth  v.  Detwiller,  131 
Pa.   St.   614   (1890). 


CHAPTER  XIV. 
POWERS  AND  LIABILITIES  OF  DIRECTORS. 


§  115.     Powers  of  Directors. 

Unless  restricted  by  statute,  charter,  or  by-laws,  the 
board  of  directors,  acting  as  a  board,  exercises  the  active 
controlling  power  in  all  corporate  business.  "The  board 
of  directors  and  not  the  stockholders,  nor  the  president, 
secretary,  treasurer,  or  other  agent,  is  the  original  and 
supreme  power  in  corporations  to  make  corporate  con- 
tracts."^ They  are  the  embodied  power  of  the  corpora- 
tion, so  constituted  by  the  mere  fact  of  their  appointment.^ 
The  stockholders  can  neither  force  the  directors  to  act 
nor  restrain  them  from  acting — save  by  charter  or  by- 
law provision — unless  the  omission  in  the  one  case  or  the 
act  in  the  other  is  so  glaringly  unjust  or  injurious  to  the 
interests  of  the  stockholders  as  to  warrant  an  appeal  to 
the  courts. 

The  powers  of  the  board  do  not,  however,  extend  be- 
yond the  purposes  for  which  the  corporation  was  formed. 
Thus  the  sale  of  the  entire  assets,  the  dissolution  of  the 
corporation  or  a  radical  change  of  its  business  are  not 
within  its  unsupported  power.  Also  the  statutes  in  the 
different  states  restrict  in  greater  or  less  degree  the  com- 
mon law  powers  of  the  board.  Thus,  as  a  rule,  directors 
are  not  allowed  to  issue  bonds  or  to  mortgage  corporate 
property  unless  expressly  authorized  thereto  by  the 
stockholders.     Also  the  absolute  authority  of  the  board 

1  2  Cook  on  Corp.,  §  709,  712. 

"Landers  v.  Frank  St.  M.  E.  Church,  114  N.  Y.  626  (1889). 

154 


POWERS  AND  UABIUTIEIS  OF  DIRECTORS.  155 

may  always  be  limited  by  charter  or  by-law  provisions. 
On  the  other  hand,  the  powers  of  directors  are  sometimes 
extended  by  charter  or  by-law  provisions,  or  by  the  stat- 
utes, in  the  latter  case  mainly  as  to  adoption  of  by-laws. 
(See  §  119.) 

The  authority  of  the  directors  may  only  be  exercised 
as  a  board  in  duly  assembled  meeting  with  a  quorum 
present.^  A  single  director,  as  such,  has  absolutely  no 
authority  over  the  corporate  affairs.'*  He  may  be  appoint- 
ed by  the  board  to  manage  some  feature  of  the  corporate 
business,  or  as  managing  director  may  practically  control 
the  corporate  affairs,  but  in  any  such  case  his  powers  are 
only  those  which  are  delegated  to  him  by  the  board  and 
are  limited  strictly  by  the  terms  of  his  appointment.^ 

The  powers  of  the  individual  director  are  few.  As  a 
knowledge  of  the  corporate  affairs  is  essential  to  the  prop- 
er discharge  of  his  duties,  he  has  a  right  to  inspect  the 
records  and  the  property  of  the  corporation  and  to  famil- 
iarize himself  with  its  operations.^  He  is  also  entitled  to 
attend  any  meeting  of  the  standing  committees,''  to  be  noti- 
fied of  all  special  meetings  of  the  board,  to  attend  all  board 
meetings  and  to  be  heard,  if  he  so  desires,  on  all  matters 
coming  before  any  such  meeting.^  If  he  discovers  any- 
thing wrong  in  the  conduct  of  the  corporate  affairs,  he  has 
no  individual  power  to  right  it,  but  must  present  the  mat- 
ter to  the  board  for  its  action, 

§  116.     Duties  of  Directors. 

A  director  of  a  corporation  is  virtually  a  trustee  for  the 
body  of  stockholders,  and  must  exercise  the   same  care 

•North  Hudson,  etc.  Assn.  v.  Childs,  82  Wis.  460  (1892);  Edgerly  v.  Emerson, 
23  N.  H.  SSS   (1851). 

♦Alabama  Nat.  Bank  v.  O'Neil,  128  Ala.  192  (1900);  Gasmor  v.  R.  R.,  189  Pa. 
St.   5    (1899). 

»  Clark  &  Marshall  on  Corp.,  8  690. 

•People  V.  Throop,  12  Wend.  (N.  Y.)  183  (1834);  Rosenfield  v.  Einstein,  46 
N.  J.   L.   479    (1884). 

'  Western  Ry.  v.  Rashout,  S  De  G.  &  Sm.  290  (1852). 

•Metropolitan,  etc.  Co.  v.  Domestic,  etc.  Co.,  44  N.  J.  Eq.  568  (1888);  Curtin  v. 
Salmon,  etc.  Co.,  130  Cal.  345  (1900);  Broughton  v.  Jones,  120  Mich.  462  (1899). 


156  DIRECTORS  AND  OFFICERS. 

and  diligence  in  the  conduct  of  the  corporate  affairs  as  a 
prudent  business  man  would  exercise  in  the  conduct  of 
his  own  affairs.'  As  a  trustee,  he  must  have  no  interest 
adverse  to  the  interest  of  the  company.     (See  §  121.) 

§  117.     Appointment  and  Removal  of  Officers  and  Agents. 

The  authority  of  the  board  to  appoint  and  remove  offi- 
cers and  agents  of  the  corporation  is  not  a  common  law 
power,  but  must  be  given  it  by  statute,  charter  or  by-law 
provision.  Unless  this  is  done,  the  power  belongs  to  and 
may  be  reserved  by  the  stockholders.     (See  §§  143,  149.) 

§  118.     Appointment  of  Committees. 

The  board  has  general  power  to  appoint  standing  com- 
mittees, to  which  may  be  delegated  any  desired  authority 
up  to  the  full  power  of  the  board  "in  the  interim  between 
its  meetings."  Usually,  however,  this  power  of  appoint- 
ment is  restated  by  the  charter  or  by-laws  of  the  corpor- 
ation, and  in  some  states  is  confirmed  by  statute  provision. 
The  members  of  the  committee,  exercising  discretionary 
powers  of  the  board,  should  also  be  members  of  the 
board.     (See  Ch.  XVI.) 

§  119.     Adoption  of  By-laws. 

Originally  the  stockholders  were  supposed  to  express 
their  wishes  as  to  the  management  of  the  corporation 
through  the  by-laws,  and  the  directors  to  exercise  their 
powers  in  subordination  thereto.^"  Of  late  years,  how- 
ever, in  many  states  the  statutes  confer  more  or  less  ex- 
tended power  to  adopt  by-laws  upon  the  directors.  In 
some  of  these  states  the  by-laws  adopted  by  the  directors 
must  be  either  in  harmony  with  the  by-laws  passed  by 

•Cook  on  Corn.,  8  648;  Elliott  v.  Baker,  194  Mass.  518  (1907). 
"North  Milwaukee,  etc.  Co.  v.  Bishop,  103  Wis.  492  (1899);  Morton,  etc.  Co.  v. 
Wysong,  51  Ind.  4   (1875). 


POWERS  AND  ^ABILITIES  OP  DIRECTORS.  157 

the  stockholders,  or  subject  to  their  revision,  but  in  some 
few  states  the  board  is  given  the  sole  and  entire  right  to 
adopt  by-laws.  Also  in  some  other  states  they  are  given 
power  to  make  by-laws  for  their  own  government.  (See 
§  19.)  When  the  stockholders  have  by  by-law  provision 
delegated  the  power  of  making  by-laws  to  the  directors,  it 
has  been  held  that  the  directors  are  not  thereby  author- 
ized to  repeal  by-laws  passed  by  the  stockholders.^^  Un- 
less directors  are  given  independent  power  to  adopt  by- 
laws by  statute  or  charter  provision,  their  by-laws  may  be 
repealed  or  amended  at  any  duly  assembled  stockholders' 
meeting.     (See  Ch.  Ill,  "By-Laws.") 


§  120.     Directors  as  Officers. 

A  director  may,  in  addition  to  his  directorship,  hold 
any  other  corporate  office  or  offices,  provided  his  official 
positions  are  not  incompatible  with  each  other.  The 
president  as  presiding  officer  of  the  board  is  always  se- 
lected from  its  membership, 

A  director  when  elected  as  an  executive  officer  of  the 
corporation,  is  as  a  matter  of  course  entitled  to  any  sal- 
ary attached  to  the  office  by  by-law  provision.  If  the  sal- 
ary was  fixed  by  mere  resolution  of  the  board,  it  should, 
however,  be  reaffirmed  after  the  appointment  of  the  direc- 
tor to  his  office.  When  the  salary  of  an  officer  who  is  also 
a  director  is  to  be  fixed  by  action  of  the  board,  the  direc- 
tor to  whom  the  salary  is  to  be  paid  should  withdraw 
from  the  room  while  the  resolution  fixing  his  salary  is 
adopted.  If  he  remains  in  the  room  and  participates  in 
the  vote  fixing  his  salary,  the  legality  of  the  action  so 
effected  is  doubtful.*^     (See  §§  io8,  121,  145.) 


"  Stevens  v.  Davison,  18  Gratt.   (Va.)  819  (1868). 

"Reynolds  v.  Diamond  Mills  Co.,  69  N.  J.  Eq.  299  (1905);  Tacobson  v.  Brook- 
lyn, etc.  Co.,  184  N.  Y.  152  (1906);  Francis  v.  Brigham,  etc.  Co.,  70  Atl.  Rep.  (Md.) 
95  (1908).  f    V        ^ 


158  DIRECTORS  AND  OFFICERS. 

§  121.     Directors  Dealing  with  Corporation. 

The  subject  of  directors'  dealings  with  their  corpora- 
tions is  too  extensive  for  full  treatment  here.  A  director 
occupies  a  fiduciary  relation  to  his  corporation  and  should 
as  far  as  possible  avoid  any  position  in  which  his  personal 
interest  is  adverse  to  that  of  the  corporation.  He  may, 
however,  speaking  generally,  make  any  contract  with  his 
corporation  that  is  fair  and  to  its  interests.  His  contract 
is  therefore  not  void  but  merely  voidable,  and  if  no  stock- 
holder objects  will  stand.^^  Also  cases  have  arisen  where 
a  contract  between  a  director  and  his  corporation  has 
been  ratified  by  a  majority  of  stockholders  at  a  duly  called 
meeting,  and  the  courts  have  sustained  the  contract.^'* 
Also,  if  all  the  stock  is  owned  by  the  directors,  and  there 
are  no  creditors,  a  director  may  contract  with  his  corpora- 
tion at  pleasure. ^^ 

In  all  cases  where  a  director  is  personally  interested  in 
any  particular  contract  or  other  matter  to  be  acted  upon 
by  the  board,  he  should  withdraw  from  the  room  while 
the  vote  is  being  taken  and  his  absence  should  be  noted 
on  the  minutes.  To  be  valid  the  action  must  be  taken  by 
a  legal  quorum  exclusive  of  the  interested  party.-^^     (See 

§   I33-) 

Sometimes  when  it  is  obviously  necessary  or  desirable 
for  directors  to  contract  with  their  corporation,  the  whole 
matter  is  covered  by  proper  by-law  provision,  as  in  the 
following  extract  from  the  by-laws  of  the  United  States 
Steel  Corporation : 

"Any  director  individually  may  be  a  party  to,  or 
may  be  interested  in  any  contract  or  transaction  of 
this  company,  provided  that  such  contract  or  trans- 
is  Fort  Payne   Rolling  Mill  v.   Hill,   174  Mass.   224    (1899);   Welch  v.   Bank,    122 
N.  Y.  177  (1890);  Cent.  Ins.  Co.  v.  N.  Y.,  etc.  R.  R.  Co.,  187  N.  Y.  225   (1907). 

"Nye  V.  Storer,  168  Mass.  S3  (1897);  Gamble  v.  Queens  Co.  Water  Co.,  123 
N.  Y.  91   (1890). 

"McCracken  v.  Robinson,  57  Fed.  375  (1892);  Barr  v.  R.  R.  Co.,  125  N.  Y.  263 
(1891). 

"Curtin  V.  Salmon,  etc.  Co.,  130  Cal.  345  (1900);  Butts  v.  Wood,  37  N.  Y.  317 
(1867):  Steele  v.  Gold,  etc.  Co.,  95  Pac.  (Colo.)  349  (1908);  Schaffhauser  v.  Brewing 
Co.,  218  Pa.   St.  298   (1907). 


POWERS  AND  LIABILITIES  OF  DIRECTORS.  159 

action  shall  be  approved  or  be  ratified  by  the  affirm- 
ative vote  of  at  least  ten  directors  not  so  inter- 
ested." 

§  122.     Common  Law  Liability  of  Directors. 

The  liabilities  of  directors  fall  naturally  under  two 
heads — common  law  liabilities  and  liabilities  imposed  by 
statute.  Under  the  common  law  the  directors  are  per- 
sonally liable  for  loss  or  damage  resulting  from  ultra  vires 
acts  ^^  (See  §  i6)  ;  for  any  unlawful  corporate  act  commit- 
ted with  their  connivance,  assent  or  knowledge ;  for  issu- 
ance of  unpaid  or  partly  paid  stock  as  full-paid;  for  paying 
dividends,  either  negligently  or  wilfully,  that  impair  the 
capital  stock  (See  §§  169,  172),  and  for  any  other  gross 
mismanagement.  As  trustees  for  the  company,  they  are 
bound  to  give  its  affairs  all  requisite  care  and  attention.  If 
they  do  not,  they  are  responsible  for  any  resulting  loss  or 
damage. ^^  They  are  not,  however,  responsible  for  the  re- 
sults of  errors  of  judgment  in  their  management  of  the 
ordinary  business  affairs  of  the  corporation.^' 

§  123.     Statutory  Liabilities  of  Directors, 

In  almost  every  state  of  the  Union  liabilities  have  been 
imposed  upon  directors  by  statute.  Thus  in  New  York — 
a  typical  state — directors  may  be  held  personally  liable  as 
follows : 

(i)  For  declaring  dividends  except  from  surplus 
profits,  or  for  dividing,  withdrawing  or  paying  out 
any  part  of  the  capital  except  that  authorized  by 
law. 

(2)  For  making  a  loan  of  corporate  money  to 
any  stockholder,  or  for  discounting  from  corporate 

"National  Cash  Reg.  Co.  v.  Leland,  94  Fed.  502  (1899);  Wickersham  v.  Critten- 
den, 93   Cal.   17    (1892). 

"Cook  on  Corp.,  §  703;  Cassidy  v.  Uhlmann  170  N.  Y.  SOS  (1902);  Brincker- 
hoof  V.  Bostwick,  88  N.  Y.  52  (1882);  Campbell  v.  Watson,  62  N.  J.  Eq.  396  (1901); 
Hayes  v.  Pierson,  65  N.  J.  Eq.  353  (1903);  Elliott  v.  Baker,  194  Mass.   518  (1907). 

"Chick  V.  Fuller,  114  Fed.  22  (1902);  Swentzell  v.  Penn  Bank,  147  Pa.  St.  140 
(1892);  Citizens'  Bldg.  Asso.  v.  Coriell,  34  N.  J.  Eq.  383  (1881);  People  v.  Equitable 
etc.  Society,  124  App.  Div.   (N.  Y.)   714  (1908). 


160  dire;ctors  and  officers. 

funds  any  note  or  evidence  of  debt  for  any  stock- 
holder, or  for  receiving  the  same  for  any  instalment 
due  on  stock. 

(3)  For  making  any  certificate  or  report  or  pub- 
lic notice  that  is  false  in  any  material  respect. 

(4)  For  making  transfers  of  property  to  officers 
or  stockholders  w^hen  the  company  is  insolvent  or 
threatened  with  insolvency,  for  the  purpose  of  pre- 
ferring or  defrauding  creditors. 

(5)  In  case  of  dissolution,  as  trustees  for  all  cor- 
porate property  that  may  come  into  their  hands. 

In  the  majority  of  the  states  directors  guilty  of  most  of 
the  enumerated  offenses  are  not  only  personally  liable,  but 
are  also  criminally  liable  under  the  laws  against  fraud, 
larceny  and  embezzlement. 

When  any  action  is  taken  by  the  board  in  violation  of 
law  or  which  might  involve  its  members  in  a  liability,  any 
dissenting  director  may  always  relieve  himself  from  re- 
sponsibility by  proper  procedure.  In  some  states  this  pro- 
cedure is  prescribed  by  statute.  Usually  it  involves  the 
entry  of  his  dissent  or  protest  on  the  minutes  of  the  partic- 
ular meeting,  or,  if  such  entry  is  refused,  publication  of  the 
protest. 

It  may  be  said  generally  that  the  law  as  to  the  liabili- 
ties and  obligations  of  directors  is  much  more  satisfactory 
in  theory  than  in  practice,  and  that  the  best  possible 
method  of  avoiding  loss  through  wrongful  or  ill-judged 
acts  of  the  directors  is  to  confine  the  membership  of  the 
board  to  men  of  known  integrity  and  character. 


CHAPTER  XV. 
MEETINGS  OF  DIRECTORS. 


§  124.     Time  of  Meetings. 

The  by-laws  usually  set  forth  the  general  details  of  di- 
rectors' meetings.  The  board  may  itself  provide  for  any 
details  not  already  prescribed  by  some  competent  au- 
thority. 

Special  meetings  of  directors  are  called  when  the  neces- 
sity arises.  Regular  meetings  are  held  at  specified  times — 
commonly  once  a  month — usually  fixed  by  the  by-laws.  In 
the  smaller  corporations  with  boards  consisting  of  a  few 
members  easily  assembled  in  special  meeting,  and  also  in 
the  larger  corporations  whose  affairs  are  conducted  mainly 
by  standing  committees,  regular  board  meetings  once  a 
quarter,  or  even  at  longer  intervals,  are  frequently  sufifi- 
cient. 

§  125.     Place  of  Meetings. 

The  usual  place  for  meetings  of  directors  is  the  princi- 
pal office  of  the  corporation  in  the  state  of  its  creation. 
Directors'  meetings  may,  however,  be  held  elsewhere, 
either  within  the  state,^  or  without  the  state  in  the  absence 
of  prohibition,^  if  properly  authorized  by  the  charter,  the 
by-laws  or  by  due  resolution  of  the  directors.      If    pro- 

>Corbett  v.  Woodward,  5  Sawy,  403   (1879);  Aahley  Wire  Co.  v.  111.   Steel  Co., 
164  111.   149  1896). 

»2  Cook  on  Corp.,  §  713a;  Saltmarsh  v.  Spaul^ing»  147  Mass.  224  (1888). 

161 


162  DIRECTORS  AND  OFFICERS. 

hibited  by  statutes,  charter  or  by-laws,  meetings  outside 
the  state  are  void,  and  their  actions  of  no  effect.^ 

In  a  majority  of  the  states  the  statutes  provide  that  di- 
rectors' meetings  may  be  held  outside  the  state  if  author- 
ized in  some  specified  manner — usually  by  the  by-laws,  in 
some  states  by  the  charter,  in  others  by  either,  but  in  one 
or  two  states  by  mere  resolution  of  the  directors.  Other 
provisions  afifecting  directors'  meetings  outside  the  state 
are  found  in  a  number  of  states. 

§  126.     Purposes  of  Meetings. 

At  duly  assembled  regular  meetings  of  directors  any 
business  within  the  power  of  the  board  may  be  trans- 
acted. At  special  meetings,  unless  otherwise  agreed  by 
every  member  of  the  board,  only  such  business  may  be 
acted  upon  as  is  set  forth  in  the  call  and  notice  of  the 
meeting.  If,  however,  the  notice  of  a  special  meeting  does 
not  specify  its  purposes,  any  ordinary  business  affairs  of 
the  corporation  may  be  transacted  thereat,  unless  the  by- 
laws specifically  provide  that  only  such  business  as  has 
been  duly  notified  may  be  transacted  at  special  meetings 
of  the  board.     (See  §  129.) 

§  127.     Assembling  Meetings. 

The  time  and  place  of  regular  meetings  are  usually  pre- 
scribed in  the  by-laws,  are  supposed  to  be  known  to  the 
directors,  and  do  not  depend  for  their  legality  upon  calls, 
waivers  or  notices."*  Notices  are,  it  is  true,  generally  pro- 
vided for  in  the  by-laws,  but  this  is  a  practical  measure  to 
ensure  the  attendance  of  directors,  and  is  not  in  compli- 
ance with  legal  requirements.  To  prevent  any  question  on 
this  point,  however,  the  by-laws  of  the  larger  corporations 

«  Brockway  v.  Gadsden,  etc.  Co.,  102  Ala.  620  (1893);  Union  Nat.  Bk.  v.  State 
Bank,    155    Mo.    95    (1899). 

*  Whitehead  v.  Rubber  Co.,  52  N.  J.  Eq.  78  (1893):  Western  Imp.  Co.  v.  Bank, 
103  Iowa  455   (1897):  Atlantic,  etc.  Co.  v.  Sanders,  36  N.  H.  252   (1858). 


MEETINGS  OP  DIKBCTORS.  163 

customarily  provide  that  failure  to  send  out  notice  of  a 
regular  meeting  shall  not  affect  its  legality,  nor  the  legality 
of  any  action  taken  thereat. 

Special  meetings,  on  the  other  hand,  are  assembled  as 
the  necessity  arises,  must  be  called  by  proper  authority, 
and  must  be  formally  notified  to  every  member  of  the 
board,  unless  these  formalities  are  duly  waived.  Accord- 
ingly special  meetings  of  the  board  are  assembled  by  means 
of  the  call  (See  Forms  50,  51)  follow^ed  by  notice  (See 
Form  60),  or  by  means  of  a  combined  call  and  waiver  of 
notice.  (See  Form  48.)  Or  if  all  the  members  of  the 
board  can  be  gotten  together,  a  special  meeting  may  by 
agreement  (See  Form  49)  be  held  at  any  time  and  without 
formality.  These  methods  of  assembling  meetings  of  di- 
rectors are  discussed  in  the  sections  which  follow. 

§  128.     Call  for  Special  Meetings. 

The  call  for  a  special  meeting  of  directors  is  the  formal 
instrument  which  authorizes  its  assembling,  specifying  its 
time,  place,  and  purposes,  and  usually  directing  or  other- 
wise obligating  the  secretary  to  notify  such  meeting  to  the 
members  of  the  board.     (See  Forms  50,  51.) 

In  some  few  states  the  statutes  prescribe  by  whom  spe- 
cial meetings  of  directors  may  be  called.  In  the  majority 
of  the  states  the  matter  is  left  entirely  for  by-law  regula- 
tion. These  almost  invariably  empower  the  president  to 
call  special  meetings,  usually  alone,  but  sometimes  in  con- 
junction with  some  other  officer.  Usually  they  provide 
that  two  or  more  of  the  directors  may  call  such  meetings. 
Occasionally  a  certain  proportion  in  interest  of  the  stock- 
holders are  authorized  thereto.  Whether  so  specified  in 
the  by-laws  or  not,  special  meetings  of  directors  may  al- 
ways be  called  by  due  resolution  of  the  board. 

The  call  for  a  special  meeting  of  directors  by  whomso- 
ever issued,  to  be  legally  effective,  must  always  specify  the 


164  '  DIRECTORS  AND  OFl^ICERS. 

time  of  meeting  and  its  place,  and  if  business  of  special 
importance  is  to  be  considered  this  must  also  be  set  forth. 

The  place  is  usually — though  not  necessarily  unless  so 
specified  by  statute  or  by-laws — the  principal  office  of  the 
corporation  within  the  state  of  incorporation.  (See  §  125.) 
In  the  absence  of  conflicting  provisions,  special  meetings 
may  be  called  to  meet  at  any  reasonable  place  in  the  discre- 
tion of  the  party  or  parties  issuing  the  call. 

The  time  at  which  the  meeting  is  to  be  held  must  be 
reasonable,  and  must  be  definitely  stated,  both  day  and 
hour  being  given.  The  particular  business  to  be  transacted 
must  be  specified  with  reasonable  detail,  and  ordinarily  no 
other  business  may  be  transacted  at  such  special  meeting. 

§  129.     Notice  of  Special  Meetings. 

When  a  call  in  due  form  for  a  special  meeting  of  direc- 
tors is  handed  to  the  secretary,  it  is  his  duty  to  send  out 
notices  of  the  meeting  thereby  authorized.  These  notices 
are  sent  in  such  manner — usually  by  mail  or  telegraph — 
and  at  such  time  before  the  meeting  as  is  prescribed  by  the 
by-laws,  or  otherwise  as  will  under  ordinary  conditions, 
permit  the  attendance  of  all  the  members  of  the  board.^ 

The  by-laws  also  frequently  prescribe  that  no  business 
save  that  specifically  set  forth  in  the  call  and  notice  shall 
be  considered  or  acted  upon  at  such  special  meetings.  If 
not  so  prescribed,  a  notice  specifying  time  and  place,  but 
not  the  business  to  be  transacted,  is  sufficient  to  authorize 
all  ordinary  corporate  business.^  It  is  otherwise  if  impor- 
tant or  unusual  business  is  to  be  transacted  at  the  special 
meeting.'' 

When  the  by-laws  do  not  prescribe  the  specific  details 

•People  V.  Albany  Medical  College,  26  Hun  (N.  Y.)  348  (1882);  Ashley  Wire 
Co.  V.  Illinois  Steel  Co.,  164  111.  149  (1896);  Stockton,  etc.  Works  v.  Houser,  109 
Cal.    1    (1895). 

•/n  re  Argus  Co.,  138  N.  Y.  S57  (1892);  Ashley  Wire  Co.  v.  Illinois  Steel  Co., 
164  111.   149    (1896). 

*  Mercantile  Library  Hall  Co.  v.  Pittsburg,  etc.  Assoc,  173  Pa.  St.  30   (1896). 


MEETINGS   OF  DIRECTORS.  .  165 

of  notice,  both  its  time  and  manner  must  be  reasonable. 
Just  what  constitutes  reasonable  notice  of  special  meetings 
of  directors  is  a  matter  on  which  judicial  decisions  vary, 
and  should  therefore  be  settled  by  express  by-law  pro- 
vision.   (See  Forms  60,  61.) 

It  is  always  presumed  that  notice  duly  mailed  with 
postage  prepaid  to  the  last  known  address  of  each  member 
of  the  board  is  received  by  the  party  addressed.  Notice  by 
postal  card  is  sufficient  when  this  method  of  notification 
is  customary.  Any  irregularity  in  call  or  notice  may  be 
cured  by  a  ratification  of  the  special  meeting  or  of  the  busi- 
ness transacted  thereat  at  a  subsequent  regular  meeting  of 
the  board,  or  if  all  the  members  are  present  at  and  parti- 
cipate in  a  special  meeting  (See  §  131),  this  in  itself  cures 
any  defect  in  call  or  notice.^  Unless  cured  in  some  way, 
failure  to  give  notice  to  any  one  director  invalidates  the 
action  of  a  special  meeting.^ 

§  130.     Call  and  Waiver  of  Notice. 

The  call  and  waiver  of  notice  of  a  special  meeting  of 
directors  is  merely  a  call  for  the  meeting  combined  with  a 
waiver  of  the  usual  formalities  of  notice  This  must  be 
signed  by  every  member  of  the  board,  but  when  so  signed 
authorizes  a  meeting  to  be  held  at  the  time  and  place,  and 
for  the  transaction  of  the  business  specified  therein. 
Whenever  the  members  of  the  board  are  readily  accessible, 
the  call  and  waiver  is  the  preferable  method  of  assembling 
special  meetings.     (See  Ch.  XXVIII.) 

§  131.     Consent  Meetings. 

If  all  the  members  of  the  board  of  directors  are  gotten 
together  or  find  themselves  together,  and  all  agree  to  hold 

•Minneapolis  Times  Co.  v.  Nimocks,  53  Minn.  381  (1893);  Chase  v.  Tuttle,  55 
Conn.  455  (1888). 

•People  V.  Batchelor,  22  N.  Y.  128  (1860);  Relley  v.  Campbell,  134  Cal.  175 
(1901);  Broughton  v.  Jones,  120  Mich.,  462  (1899);  Hill  v.  Coal  Co.,  119  Mo.  9 
(1893). 


166  DIRECTORS  AND  OFFICERS. 

a  Special  meeting,  it  may  be  held  then  and  there,  and  any 
desired  business  transacted  thereat  without  further  for- 
mahty.  Such  a  meeting  is  usually  termed  a  "consent  meet- 
ing," and  in  New  York  and  some  few  other  states  is  recog- 
nized by  statute  law.  Elsewhere  such  a  meeting  is  valid 
under  the  common  law.^°    (See  Form  49.) 

§  132.     Opening  Directors'  Meetings. 

At  the  time  appointed  for  the  meeting,  the  president  of 
the  corporation — or  the  chairman  of  the  board,  if  such  offi- 
cial exists — or  in  his  absence  the  vice-president,  calls  the 
meeting  to  order.  Should  these  officers  be  absent,  the  next 
ranking  officer  of  the  corporation,  if  a  member  of  the 
board,  presides.  Should  such  officer  be  the  secretary,  he 
should  merely  call  the  meeting  to  order,  and  then  request 
some  other  member  of  the  board  to  act  as  chairman,  or,  if 
objection  is  made,  the  appointment  should  be  effected  by 
motion.     (See  §  82.) 

If  no  officer  of  the  corporation  who  is  also  a  member 
of  the  board  is  present,  it  is  proper  for  any  member  of 
the  board  in  attendance  to  call  the  meeting  to  order,  and 
in  the  absence  of  objection  ask  some  one  to  act  as  chair- 
man. If  there  is  objection,  the  appointment  should  be 
made  by  means  of  a  motion. 

No  formal  roll-call  of  a  directors'  meeting  is  usual,  the 
secretary  merely  noting  the  names  of  those  present,  which 
are  later  entered  on  the  minutes.  If  there  is  no  quorum, 
business  may  not  be  transacted  at  that  session,  but  the 
meeting  may  adjourn  from  day  to  day,  if  desired,  until  a 
quorum  is  secured. 

Formal  submission  of  proof  of  notice  of  a  directors' 
regular  meeting  is  not  necessary  unless  called  for  by  the 
president  or  some  member  of  the  board.     The  secretary 

">  Minneapolis  Times  Co.  v.  Nimocks,  S3  Minn.  381  (1893);  Bank  of  Nat.  City 
V.  Johnston,  60  Pac.  Rep.  776  (1900). 


MEETINGS  OF  DIRECTORS.  167 

should,  however,  preserve  a  copy  of  the  notice  sent  out  and 
endorse  upon  it  the  fact  that  it  was  duly  mailed  on  the  date 
given  thereon  to  the  last  known  address  of  each  member 
of  the  board. 

In  the  case  of  special  meetings  of  directors  the  call  and 
notice,  or  call  and  waiver  of  notice  as  the  case  may  be, 
should  be  submitted  to  the  meeting,  and  be  entered  on  the 
minutes  in  full  with  a  statement  of  the  circumstances.  The 
matter  is  of  importance,  as  the  due  call  of  the  meeting  with 
sufficient  notice  to  each  member  is  absolutely  essential  to 
its  legality. 

At  a  regular  meeting  of  directors  the  order  of  business 
as  set  forth  in  the  by-laws  is  followed,  unless  set  aside  by 
formal  motion  or  unanimous  consent.  At  a  special  meet- 
ing it  is  but  seldom  applicable. 

§  133-     Quorum. 

The  number  required  for  a  quorum  at  directors'  meet- 
ings should  be  fixed  by  the  charter  or  by-laws. ^^  If  this  is 
not  the  case,  the  common  law  prevails,  and  a  majority  of 
the  whole  board  is  necessary  for  a  quorum. ^^  A  majority 
of  the  board  in  this  connection  is  a  majority  of  the  whole 
number  constituting  the  board,  and  not  of  some  reduced 
number  resulting  from  vacancies  or  removals. ^^  A  ma- 
jority of  a  quorum  can  decide  any  question  properly 
brought  before  the  meeting.^"* 

Directors  cannot  vote  by  proxy  at  directors'  meetings, 
but  must  be  personally  present  in  order  to  act  thereat. ^^ 
No  legal  authority  exists  for  permitting  directors  to  vote 
or  to  be  considered  as  present  when  merely  connected  by 
telephone,  nor  for  permitting  an  absent  member  to  sign 

"Hoyt  V.  Thompson's  Ex.,   19   N.   Y.   207   (1859). 

"Wells  V.  Rubber  Co.,   19  N.   T.   Eq.   402   (1869). 

"Moore  v.  Rector,  4  Abbott's  N.  Cas.   (N.  Y.)   51    (1873). 

'<  Wells  V.  Rubber  Co.,  19  N.  J.  Eq.  402  (1869);  Foster  v.  Mill  Co.,  92  Mo.  79 
(1887). 

"Perry  v.  Oil  Co.,  93  Ala.  364  (1890);  State  v.  Perkins,  90  Mo.  App.  603 
(1901). 


168  DIRECTORS  AND  OI^FICERS. 

the  minutes  of  the  directors'  meeting,  and  be  counted 
present  after  the  fact,  though  any  action  so  taken  may  be 
validated  by  action  at  a  subsequent  meeting  where  a  quo- 
rum is  really  present. 

A  director  cannot  legally  vote  at  directors'  meetings 
on  a  matter  in  which  he  is  personally  interested,  nor  is 
such  action  usually  valid  if  he  is  counted  to  make  a  quorum 
when  such  a  question  is  put  to  vote.^^  (See  §§  io8,  120, 
121.) 

§  134.     Reading  of  Minutes. 

As  a  matter  of  due  parliamentary  procedure,  any  un- 
approved minutes  of  preceding  directors'  meetings  should 
be  read  and  approved  or  be  otherwise  disposed  of  at  a  reg- 
ular meeting  of  directors  before  any  other  business  is  con- 
sidered. If,  however,  time  is  pressing,  the  president  some- 
times directs  that  the  reading  of  the  minutes  be  dispensed 
with,  or  the  same  end  is  accomplished  by  formal  motion. 

The  minutes  of  stockholders'  meetings  are  never  read 
at  directors'  meetings  unless  as  a  matter  of  information 
or  by  special  request,  nor,  if  read,  would  their  approval  by 
the  board  be  of  any  legal  effect.  The  minutes  of  any  pre- 
ceding board  meeting  should  not  be  approved  at  a  special 
meeting  unless  the  approval  of  such  minutes  was  specifi- 
cally mentioned  as  one  of  the  purposes  of  the  meeting. 
(See  §  165.) 

§  135.     Reports. 

At  a  regular  meeting,  after  disposal  of  the  minutes,  the 
president  takes  up  the  next  order  of  business  and  calls  for 
reports,  from  officers  first,  and  then  from  committees,  if 
any  are  to  report.  When  a  report  is  made  it  may  be  dis- 
posed of  by  motion,  or,  if  there  are  no  objections,  the  presi- 

"  Metropolitan,  etc.  Tele.  Co.  v.  Domestic,  etc.  Co.,  44  N.  J.  Eq.  568  (1888); 
Curtin  V.  Salmon  River  Co.,  130  Cal.   345    (1900). 


MEETINGS  OE  DIRECTORS.  169 

dent  may  himself  direct  that  the  report  be  received  and 
filed.  A  verbal  report  does  not  require  any  formal  dis- 
posal, the  secretary  reporting  its  substance  in  the  minutes 
as  a  matter  of  course. 

§  136.     Unfinished  and  New  Business. 

The  business  of  a  special  meeting  is,  as  a  rule,  all  new^ 
business.  It  is  set  forth  in  both  the  call  and  notice,  and 
may  be  presented  by  the  presiding  officer,  or  he  may  call 
on  the  secretary  or  some  member  of  the  board  for  its  in- 
troduction. 

At  regular  meetings  of  directors  it  usually  rests  with 
the  secretary  to  bring  up  any  matters  of  unfinished  busi- 
ness. New  matters  requiring  attention  are  brought  up  by 
the  president  or  by  any  member  interested. 

The  election  of  officers,  as  it  takes  place  but  once  a 
year,  does  not  appear  upon  the  regular  order  of  business. 
It  therefore  comes  under  the  head  of  "New  Business,"  and, 
at  the  proper  meeting,  may  be  taken  up  at  any  suitable 
time  when  new  business  is  under  consideration.  Usually 
the  by-laws  provide  that  the  election  of  officers  shall  be 
held  at  the  first  directors'  meeting  after  the  annual  meeting 
of  stockholders.    (See  Ch.  XLIII.) 

Officers  are  usually  elected  by  ballot  though  in  the  ab- 
sence of  express  provision  therefor,  the  board  may  follow 
any  method  that  will  secure  a  fair  expression  of  the  wishes 
of  its  members. 

When  the  board  is  agreed  as  to  who  are  to  be  elected, 
time  is  frequently  saved  by  instructing  the  secretary  to 
cast  the  single  ballot  of  the  meeting  for  the  recited  list  of 
officers.  Or  a  mere  motion  unanimously  carried  that  the 
named  persons  be  respectively  appointed  to  the  specified 
offices,  is  legally  sufficient.  The  election  of  officers  by  the 
board  is  sometimes  held  to  be  more  in  the  nature  of  an 
appointment  than  of  an  election.^'' 

"State  V.  Kupferle,  44  Mo.  154  (1869). 


170  DIRECTORS  AND  OFFICERS. 

Unless  otherwise  specified  by  the  by-laws  or  prevented 
by  conditions,  the  officers-elect  may  at  once  begin  the  dis- 
charge of  the  duties  of  their  respective  offices.  Frequently 
the  newly  elected  president  and  secretary  take  charge  of 
the  meeting  immediately  after  the  result  of  the  election  has 
been  announced. 

A  person  cannot  be  made  an  officer  against  his  will.^^ 
Acceptance  of  the  position  to  which  an  officer-elect  has 
been  appointed  is  therefore  necessary.  This  may  either  be 
expressed,  or  be  indicated  by  the  performance  of  the  duties 
of  his  office,  or  even  by  his  failure  to  decline  the  office  when 
properly  notified  of  his  election  thereto. ^^ 

To  prevent  any  question  as  to  whether  a  vacancy  has 
been  created  by  the  election  to  an  official  position  of  a  per- 
son who  does  not  accept  the  office,  the  statutes,  charter  or 
by-laws  should  provide  that  officers  hold  their  positions 
until  the  election  and  acceptance  or  qualification  of  their 
successors.     (See  §§  112,  143.) 

§  137.     Adjournment. 

When  the  business  of  a  meeting  has  been  finished,  or 
when  for  any  reason  the  board  cannot  longer  continue  in 
session,  an  adjournment  should  be  taken,  either  sine  die, 
which  terminates  the  meeting  absolutely,  or,  if  important 
business  is  left  unfinished,  to  some  specified  future  date. 

A  meeting  adjourned  to  some  future  time  is  on  re- 
assembling legally  regarded  as  a  continuation  of  the  orig- 
inal meeting,  may  transact  any  business  that  could  have 
been  transacted  at  the  original  meeting,  and  does  not  nec- 
essarily require  any  notification  to  the  members  of  the 
board.2o 


"  Blake  v.  Bayley,  82  Mass.   531    (1860). 

"Danville,  etc.  Co.  v.  Brown,  90  Va.  340  (1893);  Lockwood  v.  Nat.  Bank,  9  R. 
I.   308    (1869). 

20  Smith  V.  Law,  21  N.  Y.  296  (1860);  Western  Imp.  Co.  v.  Bank,  103  Iowa, 
455    (1897). 


CHAPTER  XVI. 
STANDING  COMMITTEES. 


§  138.     General. 

Standing  committees  are  those  permanent  committees 
of  the  board  to  which  some  measure  of  its  discretionary 
power  has  been  delegated.  Their  purpose  is  twofold:  (i) 
to  secure  the  prompt,  decisive  action  of  a  small,  easily  as- 
sembled body,  and  (2)  to  obviate  the  necessity  for  frequent 
meetings  of  the  board. 

As  the  discretionary  powers  of  the  board  itself  are  dele- 
gated to  standing  committees,  they  must  be  composed  of 
members  of  the  board.  Their  powers  are  exercised  during 
the  interim  between  the  board  meetings,  and  within  the 
limits  of  their  authority  they  act  with  the  same  binding 
force  and  effect  as  the  board  itself  and  their  contracts  are 
not  subject  to  revision  by  the  board.^ 

When  authorized  thereto  by  the  charter  or  by-laws  of 
the  corporation,  the  power  of  the  board  to  delegate  its  au- 
thority to  properly  constituted  standing  committees  is  well 
established.^^  How  much  power  should  be  so  delegated  is 
to  be  determined  by  the  nature  and  conditions  of  the  com- 
pany's business. 

It  is  but  rarely  that  more  than  two  standing  commit- 
tees are  deemed  necessary.  If  but  one  committee  exists, 
it  is  usually  termed  the  "executive  committee,"  and  its 
powers  are  ordinarily  those  of  the  board.    If  two  commit- 

1  But  see  Com'l,  etc.  v.  Northampton,  etc.  Co.,  190  N.  Y.  1   (1907). 

'a  Sheridan  El.  L.  Co.  v.  Chatham  Nat.  Bank,  127  N.  Y.  517  (1891);  Olcott  v. 
Tioga  Railroad  Co.,  27  N.  Y.  546  (1863);  Union  Pac.  Ry.  Co.  v.  Chicago,  etc.  Ry. 
Co.,  163  U.  S.  564,  597   (1895). 

171 


172  DIRECTORS  AND  OFFICERS. 

tees  are  appointed,  the  second  is  usually  designated  the 
"finance  committee,"  and  to  this  committee  is  given  direct 
supervision  of  the  corporate  finances  and  accounts ;  all  gen- 
eral matters  remaining  in  charge  of  the  executive  commit- 
tee. The  matter  is,  however,  one  to  be  regulated  by  the 
charter  or  by-laws,  and  variations  of  the  usual  arrange- 
ments are  frequent. 

When  standing  committees  are  appointed  with  the 
usual  powers,  they  are  the  real  managing  bodies  of  the  cor- 
poration, the  board  merely  receiving  their  reports  and  su- 
pervising their  operations.  In  a  small  corporation,  or  any 
corporation  with  a  compact,  easily  assembled  board,  they 
are,  as  a  rule,  an  unnecessary  and  even  undesirable  compli- 
cation. They  are  advantageous  only  when  the  board  is  so 
large  or  so  scattered  as  to  be  difficult  of  assembling,  or 
when  for  other  reasons  the  business  of  the  corporation 
cannot  be  properly  transacted  by  the  board  as  a  whole. 
Not  infrequently  the  standing  committee  is  used  as  a  de- 
vice by  which  a  few  men  practically  manage  the  affairs  of 
the  corporation,  the  board  being  superseded  when  there  is 
no  real  occasion  therefor. 

The  membership  of  standing  committees  is  seldom  less 
than  three,  nor,  save  in  very  large  corporations,  more  than 
five.  To  increase  the  number  renders  the  standing  com- 
mittee unwieldy  and  defeats  the  purpose  of  its  creation. 

§  139.      Appointment  of  Standing  Committees. 

The  appointment  and  the  membership  of  standing  com- 
mittees are  usually  prescribed  by  charter  provision.  The 
details  of  appointment,  and  of  the  duties  and  procedure  of 
these  committees  thereafter  are  sometimes  fixed  by  the 
charter,  but  are  usually  and  better  left  for  the  by-laws. 
Frequently  the  charter  merely  prescribes  that  a  standing 
committee,  or  committees,  shall  or  may  be  appomted, 
leaving  all  details  to  the  by-laws. 


STANDING    COMMITTEES.  173 

The  charter  or  by-laws  frequently  provide  that  the 
president  of  the  company  shall  be  ex  officio,  a  member  of  the 
principal  standing  committee,  and  the  treasurer,  if  a  direc- 
tor, is  designated  a  member  of  the  finance  committee  as  a 
matter  of  course.  Beyond  this,  the  appointment  of  stand- 
ing committees  is  usually  and  properly  left  to  the  board. 

The  election  or  appointment  of  members  of  the  stand- 
ing committees  is  usually  for  a  specified  term.  Vacancies 
in  the  committees  occurring  meanwhile  are  filled  in  the 
manner  prescribed  by  the  charter  or  by-laws.  Sometimes 
these  provide  that  such  vacancies  shall  be  filled  for  the  un- 
expired term  by  the  remaining  members  of  the  committee, 
perhaps  subject  to  approval  by  the  board  of  directors  at 
its  next  meeting.  Usually  and  preferably  all  vacancies  in 
the  standing  committees  are  filled  by  the  board  of  direc- 
tors. 

§  140.     Organization  of  Standing  Committees. 

The  usual  officers  of  the  standing  committees  are  the 
chairman  and  recording  secretary.  These  are  sometimes 
appointed  by  the  board,  while  at  other  times  the  appoint- 
ments are  left  to  the  committees.  When  the  president  of 
the  company  is  ex  officio  a  member  of  a  standing  committee 
he  is  also  usually  designated  as  its  presiding  officer.  The 
secretary  of  the  corporation  is  frequently  appointed  secre- 
tary of  one  at  least  of  the  standing  committees.  If  not  a 
member  of  the  board,  he  then  merely  acts  as  recording 
officer  of  the  committee,  not  participating  in  its  delibera- 
tions. 

§  141.     Meetings  of  the  Standing  Committees. 

The  following  by-law  gives  a  very  clear  statement  of 
the  usual  procedure  in  regard  to  meetings  of  standing 
committees.    It  is  for  the  most  part  merely  declaratory  of 


174  DIRECTORS  AND  OI^FICERS. 

the  common  or  parliamentary  law  which  governs  the  ac- 
tions of  any  committee :  "The  standing  committees  shall 
fix  their  respective  regulations  and  rules  of  procedure,  and 
shall  meet  where  and  as  provided  by  such  rules  or  as  pro- 
vided by  the  resolutions  of  the  board  of  directors,  but  at 
every  meeting  a  majority  of  the  whole  committee  shall  be 
necessary  to  constitute  a  quorum,  and  the  affirmative  vote 
of  a  majority  of  the  whole  committee  shall  be  necessary 
for  the  adoption  of  any  resolution  or  course  of  action.  Full 
minutes  of  the  proceedings  of  committee  meetings  shall  be 
kept,  and  reports  made  to  the  board  of  directors  when  re- 
quested."^ 

The  general  rules  governing  the  meetings  of  a  standing 
committee  are  the  same  as  for  those  of  meetings  of  the 
board.^  Special  meetings  must  be  duly  notified  to  every 
member  of  the  committee  unless  waived  by  formal  agree- 
ment or  by  the  presence  of  every  member  at  the  meeting. 
Actions  taken  at  meetings  of  the  committee  should  be  ex- 
pressed by  means  of  duly  adopted  motions  or  resolutions, 
and  careful  minutes  of  all  proceedings  should  be  kept  in  a 
minute  book  provided  for  the  purpose,  and  not  in  the  min- 
ute book  of  the  directors.  The  committee  proceedings 
should  from  time  to  time  be  reported  to  the  board,  either 
by  direct  report  or  by  submission  of  the  committee  min- 
utes. 

Unless  otherwise  expressly  provided,  the  majority  of 
any  standing  committee  constitutes  a  quorum  and  a  ma- 
jority of  that  quorum  has  power  to  act."* 


^  Conyngton  on  Corporate  Organization,  p.   326. 

'Met.  Tel.  Co.  v.  Domestic  Tel.  Co.,  44  N.  J.  Eq.  568  (1888);  McNeil  v.  Chamber 
of  Commerce,   154   Mass.   277   (1891). 

♦Burleigh  v.  Ford,  61  N.  H.  360  (1881);  State  v.  Jersey  City,  27  N.  T.  L,.  493 
(1859);  McNeil  v.  Boston  Chamber  of  Com.,  154  Mass.  277   (1891). 


CHAPTER  XVII. 
THE  CORPORATE  OFFICIALS. 


§142.     Officers. 

The  term  "officers"  is  here  applied  to  those  permanent 
agents  of  the  corporation  appointed  or  elected — usually  by 
the  board  of  directors — as  the  direct  representatives  of  the 
board,  and  of  the  corporation.  The  directors  are  them- 
selves at  times  and  with  legal  correctness  styled  "officers," 
but  to  avoid  confusion  the  term  is,  as  a  rule,  employed  in 
the  present  volume  to  designate  those  officials  subordinate 
to  the  board. 

§  143.     Appointment  of  Officers. 

The  stockholders  have  the  original  right  to  elect  or  ap- 
point officers  of  their  corporation,  and  in  the  absence  of 
preventing  statutes  this  power  may  be  reserved  to  them. 
In  practice,  however,  by  express  provision  of  the  statutes, 
charter  or  by-laws,  the  power  of  appointing  officers  is  al- 
most invariably  vested  in  the  board  of  directors. 

Certain  corporate  officers  are  usually  specified  and  re- 
quired by  statutes,  charter,  or  by-laws,  and  such  officers  are 
elected  as  a  matter  of  course.  Beyond  these,  the  board 
may  appoint  any  other  officers  or  agents  necessary  to  prop- 
erly conduct  the  business  of  the  corporation.  If  the  time 
and  manner  of  election  of  corporate  officials  is  not  pre- 
scribed by  some  higher  authority,  the  directors  may  ap- 
point them  in  such  manner  and  at  such  time  as  they  deem 
best.    (See  §  136.) 

175 


176  DIRECTORS  AND  OFJPICSRS. 

The  election  of  one  person  to  two  corporate  offices  is 
common,  and  is  usually  authorized  by  charter  or  by-law 
provision.  If  otherwise,  the  board  still  has  power  to  com- 
bine any  two  or  more  official  positions  in  one  person  if  the 
duties  of  the  combined  positions  do  not  conffict.^ 

The  term  for  which  corporate  officials  are  elected  is 
usually  prescribed  by  proper  charter  or  by-law  provision, 
and  seldom  exceeds  one  year.  As  a  matter  of  business 
policy  such  term  should  not  be  longer  than  that  of  the  di- 
rectors by  whom  the  officials  are  elected.  That  is,  if  the 
directors  are  elected  annually,  the  officers  also  should  be 
elected  annually  so  that  each  new  board  may  appoint  its 
own  agents. 

The  appointment  of  managers,  experts  or  other  special- 
ly skilled  employees  is,  however,  of  a  different  nature. 
These  are  not  so  directly  agents  of  the  board,  and  con- 
tracts for  their  services  extending  over  a  term  of  years  are 
frequently  advantageous  or  even  necessary  to  the  corpora- 
tion. Such  contracts  are  entirely  within  the  power  of  the 
board  without  special  charter  or  by-law  authorization. 

Unless  they  resign  or  are  removed  in  some  manner,  the 
corporate  officials  hold  over  after  the  expiration  of  their 
elective  term,  until  they  are  relieved  by  properly  elected 
or  appointed  successors.^  This  is  frequently  a  statute, 
charter  or  by-law  provision,  but,  if  otherwise,  is  a  matter 
of  common  law.  (See  §  136.)  These  de  facto  officials  have 
every  power  that  they  possessed  before  the  expiration  of 
their  elective  terms.     (See  §  148.) 

As  the  board  elects  and  appoints  officers,  it  has  also  the 
power  to  fill  vacancies  among  them  without  specific  au- 
thorization.^ 

•People  V.  Green,  58  N.  Y.  295-304  (1874);  Sargent  y.  Webster,  54  Mas».  497 
(1847);  2  Cook  on  Corp.,  §  712. 

'Mining  Co.  v.  Abraham,  26  Ore.  282  (1894);  Thorington  v.  Gould,  59  Ala.  461 
(1877);  Agricultural  Soc.  v.  Houseman,  81  Mich.  609   (1890). 

*In  Matter  of  Union  Ins.  Co.,  22  Wend.  591  (1840). 


THE   CORPORATE  OFFICIALS.  177 

§  144.     Qualifications  of  Officers. 

The  officers  are  the  agents  of  the  board  of  directors 
and  of  the  corporation.  Hence  any  one  who  may  act  as  an 
agent  is  capable  of  acting  as  a  corporate  official,  and  in 
the  absence  of  prohibition  a  married  woman,  a  minor,  an 
alien,  or  one  of  its  own  directors,  may  be  legally  elected  as 
an  officer  of  the  corporation. 

Membership  in  the  board  is,  as  a  rule,  a  necessary  qual- 
ification for  the  president  and  vice-president  of  a  corpora- 
tion. They  are  almost  invariably  the  presiding  officers  of 
the  board,  and  when  this  is  the  case,  the  election  of  a  pres- 
ident or  vice-president  not  a  member  of  that  body  might 
lead  to  difficult  situations. 

§  145.     Compensation  of  Officers. 

The  compensation  to  be  paid  officers  is  occasionally 
prescribed  or  limited  by  the  by-laws,  and  still  more  occa- 
sionally by  the  charter,  but  as  a  rule  is  left  to  the  discre- 
tion of  the  board. 

Directors  have  no  power  to  fix  their  own  compensation 
as  directors,  nor  should  officers  who  are  also  members  of 
the  board  vote  upon  their  own  salaries.'*  (See  §§  io8, 
120.)  The  board  has,  however,  unless  restricted  by  char- 
ter or  by-law  provision,  full  power  to  fix  the  salaries  or 
other  compensation  of  its  appointees.^  Any  officer,  agent 
or  employee  who  is  not  a  director  may  recover  the  reason- 
able value  of  his  services  from  the  corporation  even  though 
no  specific  agreement  as  to  compensation  was  made  at  the 
time  of  his  election  or  appointment.^    (See  §  io8.) 

§  146.     Powers  and  Duties  of  Officers. 

The  mere  fact  of  election  to  office  does  not  necessarily 

*  Miner  v.  Ice  Co.,  93  Mich.  97  (1892);  Steele  v.  Gold  Mining  Co.,  95  Pac. 
(Colo.)   349  (1908);   SchaflFhauser  v.  Brewing  Co.,  218  Pa.  St.  298   (1907). 

•Waite  V.  Windham  Co.  Min.  Co.,  37  Vt.  608  (1865);  Fitchett  v.  Murphy,  46 
App.  Div.   (N.  Y.)   181   (1899). 

•Cheeney  v.  Lafayette  Ry.  Co.,  68  111.  570  (1873);  Smith  v.  Long  Island  R.  R. 
Co..  102  N.  Y.  190  (1886). 


178  DIRECTORS  AND  OFJCICERS. 

in  itself  confer  any  power  or  duties  upon  the  officials  of 
a  corporation/  Custom  or  usage  may  have  attached  cer- 
tain powers  and  duties  to  certain  official  positions,  but  the 
corporation  may  disregard  this  and  vary  the  powers  and 
duties  of  the  different  officers  as  seems  to  it  best. 

In  general  it  may  be  said  of  corporate  officials  that,  as 
agents  of  the  corporation,  they  are  governed  by  the  gen- 
eral law  of  agency.  Accordingly  a  corporate  official  has 
only  those  powers  which  are  conferred  upon  him  or  are 
incidental  to  the  exercise  of  these  powers. 

The  different  sources  from  which  the  powers  of  cor- 
porate officials  are  derived  are,  in  rank  of  their  authority, 
(i)  the  statutes  of  the  state,  (2)  the  charter,  (3)  the  by- 
laws, (4)  resolutions  of  directors,  and  (5)  usage. 

Statutory  provisions  affecting  corporate  officials  are 
few.  The  charter  likewise  but  seldom  contains  provisions 
affecting  the  officers  of  the  corporation,  though  occasion- 
ally such  provisions  are  inserted  therein  for  the  sake  of 
permanence.  The  by-laws,  however,  usually  prescribe  the 
official  powers  and  duties  with  fulness,  and  the  directors, 
subject  to  the  provisions  of  the  higher  authorities  referred 
to,  confer  such  other  proper  official  powers  and  prescribe 
such  other  proper  official  duties  as  they  see  fit. 

Beyond  all  these,  it  will  usually  be  found  that  the  offi- 
cers transact  certain  routine  business*  and  perform  certain 
duties  as  a  matter  of  custom,  and  their  acts  are  valid  and 
binding  upon  the  corporation,  even  though  not  specifically 
authorized.^ 

Also  it  may  be  stated  generally  that  whenever  the  di- 
rectors permit  an  officer  to  exercise  apparent  authority  in 
the  corporate  affairs  or  transactions,  the  corporation  is 

TR.  R.  Co.  V.  Bayne,  11  Hun  (N.  Y.)  166;  Aff'd,  75  N.  \.  1  (1877);  Cushman 
V.  Cleveland,  etc.  Co.,  84  N.  E.   (Ind.)   759   (1908). 

•Fitzgerald,  etc.  Co.  v.  Fitzgerald,  137  U.  S.  98  (1890);  Mining  Co.  v.  Bank, 
95  Fed.  Rep.  23   (1899);  Phillips  v.  Campbell,  43  N.  Y.  271   (1870). 

•Ins.  Co.  V.  McCain,  96  U.  S.  84  (1877);  New  York.  etc.  R.  R.  Co.  v. 
Schuyler,  34  N.  Y.  30  (186S);  Story  on  Agency,  SS  126,  127;  Clement  v.  Young,  etc. 
Co.,  69  N.  J.  E;q.  347  (1905). 


the;  corporate  officials.  179 

bound  thereby  as  to  third  persons  as  fully  as  if  such  officer 
had  been  duly  authorized.^" 

Beyond  this,  corporate  officers  not  infrequently  act 
clearly  without  the  bounds  of  their  authority,  relying  upon 
ratification  of  their  acts  by  the  board  of  directors  later.  If 
so  ratified,  the  corporation  is  bound  and  the  officials  are 
absolved  from  all  responsibility  for  their  ultra  vires  acts.^^ 
If,  however,  the  official  action  is  not  ratified,  the  corpora- 
tion is  not  bound  and  the  officers  are  personally  liable  for 
their  acts.^^ 

The  validity  of  an  officer's  acts  depends  entirely  upon 
his  authority,  and  not  on  the  place  in  which  the  authority 
is  exercised. ^^  Therefore,  when  in  the  proper  discharge 
of  his  duties,  his  acts  are  as  effective  in  one  place  as  an- 
other, and  equally  binding  upon  the  corporation. 

The  board  may  temporarily  delegate  the  powers  of  an 
official  to  another  person,  provided  such  delegation  is  rea- 
sonable and  only  for  such  length  of  time  as  may  be  actually 
necessary  to  conserve  the  interests  of  the  corporation. 
An  officer  cannot  delegate  his  powers  to  another  officer  in 
any  material  matter,  even  temporarily,  unless  specially 
authorized  thereto  by  the  by-laws  or  by  action  of  the 
board.^'* 

§  147.     Liabilities  of  Officers. 

An  officer  contracting  for  his  corporation  within  the 
limits  of  his  authority  is  merely  a  corporate  agent,  and  if 
not  guilty  of  fraud  or  deceit,  does  not  bind  himself  and 
cannot  be  held  personally  liable  in  any  way.  If,  however, 
he  exceeds  his  authority,   he   renders  himself  personally 

><>New  York  &  New  Haven  R.  Co.  v.  Schuyler,  34  N.  Y.  30  (1865);  Fifth  Ave. 
Bank  v.  Railroad  Co.,  137  N.  Y.  231  (1893);  3  Clark  &  Marshall  on  Corp.,  §  708; 
Louchheim  v.  Bldg.  Assn.,  211  Pa.   St.  499  (1905). 

"Rolling  Mill  V.  R.  R.,  120  U.  S.  256  (1886);  Nims  v.  Boys'  School,  160  Mass. 
177   (1893);  Northwestern  Fuel  Co.  v.  Lee,   103  Wis.  426   (1899). 

"Wight  v.  Madison,   26  N.   Y.    117   (1862). 

"Hastings  v.  Ins.  Co.,  138  N.  Y.  473   (1893). 

"Caldwell  v.  Life  Assn.,  53  App.  Div.  (N.  Y.)  245  (1900).  As  to  when  corpora- 
tion will  be  bound,  see  Emerson  v.  Hat  Co.,  12  Mass.  237  (1815);  also  Luttrell  v. 
Martin,  112  N.  C.  593   (1892). 


180  DIRECTORS  AND  OFFICERS. 

liable,^^  unless  the  corporation  later  ratifies  his  action,^" 
when  he  is  released. 

Officers  are  bound  to  use  ordinary  care  and  diligence 
in  the  conduct  of  the  corporate  business  and  are  therefore 
liable  for  any  losses  caused  by  their  neglect,  mismanage- 
ment or  wrong-doing  in  the  discharge  of  tiieir  official 
duties/^  though  not  for  an  error  of  judgment.^* 

An  officer  is  also  personally  liable  for  any  wrong  he 
does  on  behalf  of  his  corporation,  such  as  sending  out  false 
and  deceptive  reports,  statements,  prospectuses,  etc.,  even 
though  the  corporation  is  also  liable. ^^     (See  §  122.) 

In  many  states  statutes  exist  prescribing  penalties  for 
various  misdeeds  of  corporate  officials.  Thus  in  New 
York,  neglect  to  make  proper  entries  in  the  stock  book,  or 
to  exhibit  this  book  on  request  to  those  entitled  to  its  in- 
spection involves  a  penalty  of  fifty  dollars  and  of  resulting 
damages;  rendering  a  false  report  involves  liability  for  all 
resulting  damages;  loaning  corporate  funds  to  a  stock- 
holder or  allowing  him  to  withdraw  his  investment  in  any 
way  renders  officers  and  directors  personally  liable  for  all 
debts  of  the  corporation  until  the  amount  is  returned,  while 
falsifying  accounts  or  erasing  or  destroying  the  corporate 
records  is  made  a  forgery.     (See  §  123.) 


§  148.     De  Facto  Officers. 

A  de  facto  officer  is  one  actually  in  possession  of  an 
office  and  exercising  its  powers  and  duties  by  virtue  of 
some  other  authority  or  right  than  that  of  a  regular,  un- 
questioned election  or  appointment.  He  must  be  "dis- 
tinguished on  the  one  hand  from  a  mere  usurper  of  an 

"Wight  V.   Madison,  26  N.  Y.   117   (1862). 

"See   citations   under    11. 

"Mason  v.  Henry,  152  N.  Y.  529  (1897);  Wilkinson  v.  Dodd,  40  N.  J.  Eq.  123 
(1885). 

"  Briggs  V.  Spaulding,  141  U.  S.  132  (1890);  Freeman  v.  Sea  View  Hotel  Co.,  57 
N.  J.  Eq.  68  (1898);  Holmes  et  al.  v.  Willard,  125  N.  Y.  75  (1890);  People  v.  Equit, 
etc.  Society,  124  App.  Div.   (N.  Y.)   714   (1908). 

"Cowley  V.  Smyth,  46  N.  J.  h.  380  (1884);  Morgan  v.  Skiddy,  62  N.  Y.  319 
(1875). 


THE   CORPORATE  OFFICIALS.  181 

office  and  on  the  other  hand  from  an  officer  de  jure"^^ 
i.  e.  one  holding  his  position  by  legal  right.  It  not  infre- 
quently happens  that  the  results  of  an  election  are  dis- 
puted or  that  an  election  is  not  held.  In  the  first  case  if 
the  officers  claiming  election  enter  upon  their  official 
duties,  or  in  the  second  case  if  the  old  officers  continue  in 
office,  the  acting  officials  are  de  facto  officers,  and,  until 
ousted,  or  superseded,  their  official  acts  are  legal  and  bind- 
ing upon  the  corporation.     (See  §§  112,  142.) 

Speaking  generally  it  may  be  said  that  anyone  con- 
nected with  a  corporation  who  is  publicly  allowed  to  act 
as  its  officer  or  agent,  is  a  de  facto  officer.  Persons  dealing 
with  the  corporation  cannot  usually  investigate  and  ascer- 
tain whether  those  who  purport  to  represent  it  are  legally 
appointed.  The  law  therefore  holds  that  the  acts  of  these 
de  facto  officers  are  binding  on  the  company  even  though 
they  have  no  legal  right  to  the  position  they  pretend  to 
hold. 


§  149.     Removals  and  Resignations. 

When  an  officer  is  elected  for  a  definite  term  and  ac- 
cepts the  office,  a  contract  has  been  made  for  that  term, 
and,  unless  power  has  been  given  the  board  by  express 
provision  of  statutes,  charter  or  by-laws  to  remove  the  cor- 
porate officers  at  pleasure,  the  incumbent  can  only  be 
legally  removed  for  cause.^^  If  a  removal  is  to  be  made, 
the  cause  must  be  such  as  will  justify  breaking  the  contract 
with  the  offending  official,  charges  must  be  brought 
against  him,  and  he  must  be  allowed  an  opportunity  to  de- 
fend  himself.^^     If    removed   without    cause,    his    official 

»•  Waterman  v.  Chicago,  etc.  R.  R.  Co.,  139  111.  658-665  (1892);  Merchants'  Bank 
V.  Citizens'  Gas  Light  Co.,  159  Mass.  505  (1893);  Mining  Co.  v.  Anglo-Californian 
Bank,  104  U.  S.  192  (1881). 

"Nathan  v.  Tompkins,  82  Ala.  437  (1886);  Powers  v.  lilue  Grass  B  Assn.,  86 
Fed.  705   (1898);   State  v.  Kuehn.  34  Wis.  229   (1874). 

"State  V.  Adams,  44  Mo.  570  (1869);  State  v.  Kuehn,  34  Wis.  229  (1874). 


182  DIRECTORS  AND  OFFICERS. 

status  ceases  but  the  corporation  is  liable  to  him  for  breach 
of  contract.^^ 

In  some  few  states  the  statutes  give  the  directors  power 
to  remove  officers  at  pleasure.  Elsewhere  it  may  be  given 
them  by  charter  or  by-law  provision.^"*  Such  provisions 
are  usually  desirable  as  the  board  is  responsible  for  the 
proper  conduct  of  the  corporate  business  and  should  have 
power  to  remove  an  objectionable  official  without  the 
necessity  of  a  formal  trial.  When  by-laws  are  adopted 
giving  the  directors  power  to  remove  officers  without 
cause,  they  do  not  authorize  the  removal  of  officers  already 
elected,  but  are  effective  as  to  officers  elected  thereafter. 

Under  the  usual  conditions  of  election,  a  corporate 
officer  may  resign  at  will,^^  unless  he  has  entered  into  some 
distinct  agreement  to  serve  the  corporation  for  a  fixed 
period.  His  resignation  should,  as  a  rule,  be  in  writing, 
be  phrased  to  meet  the  exact  end  in  view  and  be  delivered 
to  the  secretary,^^  though  an  oral  resignation  in  open  meet- 
ing is  sufficient,  especially  if  followed  by  acceptance  by  the 
board.27  (See  Ch.  XXXVI.)  It  has  been  held  that  all 
the  corporate  officers  cannot  resign  at  once  for  the  pur- 
pose of  throwing  the  corporation  into  the  hands  of  a  re- 
ceiver.^^ 


2'  In  re  Griffing  Iron  Co.,  63  N.  T.  L.  168  (1899) ;  Douglass  v.  Merchants'  Ins.  Co., 
118  N.  Y.  484  (1890);  Brindley  v.  Walker,  70  Atl.  Rep.   (Pa.)  794  (1908). 

"State  V.  Adams,  44  Mo.  570  (1869);  Danah  v.  Ice  &  Storage  Co.,  50  W.  Va. 
417   (1901). 

"  Yorkville  Bank  v.  Zeltner  B.  Co.,  80  App.  Div.  (N.  Y.)  578  (1903);  Van 
Amburgh  v.   Baker,  81   N.   Y.  46    (1880). 

"Manhattan  (Jo.  v.  Kaldenberg,  165  N.  Y.  1  (1900);  Noble  v.  Euler,  20  App. 
Div.    (N.  Y.)    548   (1897). 

"  Briggs  V.  Spaulding,  141  U.  S.  132-150  (1891);  Fearing  v.  Glenn,  73  Fed.  116 
(1896). 

»  Zeltner  v.  Brewing  Co.,  174  N.  Y.  247   (1903). 


CHAPTER   XVIII. 
THE  CORPORATE  OFFICIALS.— (Continued.) 


§  150.     Executive  Officers. 

The  necessary  officers  of  a  corporation,  sometimes 
termed  the  "executive  officers,"  are  the  president,  secre- 
tary and  treasurer.  One  or  more  vice-presidents  are 
usual.  In  addition  to  these,  other  officers  or  agents  are 
frequently  appointed,  as  managing  directors,  general  man- 
agers or  superintendents,  counsel,  auditors  and  special 
agents  for  particular  purposes. 

§  151.     The  President. 

The  president  is  the  usual  presiding  officer  of  the  cor- 
poration. His  duties  vary  w^idely.  In  the  smaller  cor- 
porations, in  addition  to  the  duties  more  strictly  pertain- 
ing to  his  office,  he  is  frequently  assigned  the  active  man- 
agement of  the  corporate  business.  In  the  larger  corpora- 
tions the  duties  usually  incident  to  the  president's  office 
are  frequently  allotted  in  greater  or  less  degree  to  other 
officers.  Thus  a  chairman  of  the  board  is  occasionally  ap- 
pointed to  preside  at  meetings  of  the  directors;  chairmen 
of  the  standing  committees  supervise  and  direct  the  mat- 
ters w^ithin  the  scope  of  their  committees,  and  vice-presi- 
dents will  discharge  some  measure  of  the  president's 
duties. 

The  usual  duties  of  the  president  assigned  him  by  the 
by-laws  are  well  set  forth  in  the  following  extract '} 

'  Conyngton   on    Corporate   Organization,    pp.    314-315. 

183 


184  DIRECTORS  AND  OFFICERS. 

"The  President,  when  present,  shall  preside  at  all 
meetings  of  the  stockholders  and  of  the  Board  of 
Directors;  shall  sign  all  certificates  of  stock;  shall 
sign,  or  countersign,  as  may  be  necessary,  all  such 
bills,  notes,  checks,  contracts  and  other  instruments 
as  may  pertain  to  the  ordinary  course  of  the  Com- 
pany's business,  and  sign,  when  duly  authorized 
thereto,  all  contracts,  orders,  deeds,  liens,  licenses 
and  other  instruments  of  a  special  nature. 

"He  may  also,  in  the  absence  or  disability  of  the 
Treasurer,  endorse  checks,  drafts  and  other  nego- 
tiable instruments,  for  deposit  or  collection,  and 
shall,  with  the  Secretary,  sign  the  minutes  of  all 
meetings  over  which  he  may  have  presided. 

"At  the  first  regular  meeting  of  the  Board  in 
January  he  shall  submit  a  complete  report  of  the 
operations  of  the  Company  for  the  preceding  year, 
together  with  a  statement  of  the  Company  affairs 
as  existing  at  the  close  of  such  year,  and  shall  sub- 
mit a  similar  report  at  the  annual  meeting  of  stock- 
holders; also,  he  shall  report  to  the  Board  of  Di- 
rectors, from  time  to  time,  all  such  matters  coming 
within  his  notice  and  relating  to  the  interests  of  the 
Company  as  should  be  brought  to  the  attention  of 
the  Board. 

"He  shall  be,  ex  officio,  a  member  of  all  standing 
committees,  shall  have  such  usual  powers  of  super- 
vision and  management  as  may  pertain  to  the  office 
of  President,  and  perform  such  other  duties  as  may 
be  properly  required  of  him  by  the  Board  of  Di- 
rectors." 

Unless  expressly  authorized  thereto,  the  president  has 
no  power  to  execute  a  corporate  deed,  a  mortgage,  an  as- 
signment of  property,  a  license  or  other  formal  instrument, 
or  to  borrow  money  or  bind  the  company  by  a  promissory 
note.^  Nor  has  he  legally  power  to  buy.  sell  or  contract 
for  the  corporation  outside  the  regular  routine  of  business, 
unless  authorized  thereto  by  resolution  of  the  board,  or 

*  Bennett  v.  Keen,  59  N.  J.  Eq.  634  (1899);  Tobin  v.  Roaring  Creek,  etc.  R.  Co., 
86  Fed.  1020  (1898);  Western  Nat.  Bank  v.  Armstrong,  152  U.  S.  346  (1893);  Cause 
V.  Trust  Co.,  124  App.  Div.   (N.  Y.)   438   (1908). 


THE   CORPORATE  OFFICIALS.  185 

unless,  from  his  previous  action  as  the  authorized  agent  of 
the  company  in  particular  directions,  such  authority  may 
be  rightly  inferred. 

When,  however,  the  president  is  authorized  to  attend 
to  any  particular  business,  he  is  also  empowered  to  make 
all  contracts  usual  or  necessary  in  the  course  of  that  busi- 
ness.3  Also  in  practice  he  is  so  commonly  authorized  to 
act  generally  for  the  corporation  that  unless  it  can  be 
shown  in  any  particular  instance  that  he  has  gone  clearly 
outside  the  bounds  of  his  usual  authority,  his  contract  will 
bind  the  company."* 

The  president,  as  he  is  to  preside  over  the  meetings  of 
the  board,  must  himself  be  a  director.  He  is  usually  ex 
officio  chairman  of  one  at  least  of  the  standing  committees. 
(See  §  140.) 

§  152.     The  Vice-President. 

Vice-presidents  designated  in  rank  as  first,  second,  third 
and  so  on,  are  usually  appointed  in  accordance  with  the 
corporate  needs.  These,  in  the  order  of  precedence,  per- 
form the  duties  of  the  president  in  the  absence  of  that  offi- 
cial. Beyond  this  in  the  larger  corporations  active  func- 
tions are  usually  provided  for  one  or  more  vice-presidents, 
these  duties  being  taken  more  or  less  directly  from  those 
usually  discharged  by  the  president.  The  position  of  vice- 
president  is,  however,  frequently  entirely  honorary. 

When  the  vice-president  rightly  assumes  the  office  of 
president,  he  possesses  and  exercises  every  power  of  that 
official  as  fully  as  does  the  president  himself  when  acting.^ 

§  153.     The  Secretary. 

The  secretary  is  the  recording  officer  of  the  corpora- 

•  Patterson  v.   Robinson,   116  N.  Y.   193    (1889);   Mining  Co.  v.  Anglo-Am.   Bank, 

104  U.  S.  192  (1881);  Wells,  Fargo  &  Co.  v.  Enright,  127  Cal.  669  (1900);  Rathbun 
V.  Sn6w,  123  N.  Y.  343   (1890). 

*  Trustees,  etc.  v.  Connolly,  157  Mass.  272   (1892);  Sarmiento  v.  Boat  &  Oar  Co., 

105  Mich.  300  (1895);  Fitzgerald  Cons.  Co.  v.  Fitzgerald,  137  U.  S.  98  (1890); 
Scribner  v.  Flagg  Mfg.  Co.,  175  Mass.  536   (1900). 

•Ellison  V.  Branstrator,  153  Ind.  146  (1899);  Smith  v.  Smith,  62  111.  493  (1872). 


186  DIRECTORS  AND  OFFICERS. 

tion.     His  usual  duties  are  well  set  forth  in  the  following 
by-law  extract:*^ 

"The  Secretary  shall  keep  full  minutes  of  all  meet- 
ings of  the  stockholders  and  of  the  Board  of  Di- 
rectors; shall  read  such  minutes  at  the  proper  sub- 
sequent meetings ;  shall  issue  all  calls  for  meetings 
and  notify  all  officers  and  directors  of  their  election; 
shall  have  charge  of  and  keep  the  seal  of  the  cor- 
poration and  afhx  the  same  to  certificates  of  stock 
when  such  certificates  are  signed  by  the  President 
and  Treasurer,  and  shall  afhx  the  seal,  attested  by 
his  signature,  to  such  other  instruments  as  may  re- 
quire the  same. 

"He  shall  keep  the  stock  certificate  book  and  the 
other  usual  corporation  books,  and  shall  prepare 
record,  transfer,  issue,  seal  and  cancel  certificates  of 
stock,  as  required  by  the  transactions  of  the  Com- 
pany and  its  stockholders.  He  shall  sign  with  the 
President  all  contracts,  deeds,  licenses  and  other 
instruments  when  so  ordered. 

"He  shall  make  such  reports  to  the  Board  of  Di- 
rectors as  they  may  request,  and  shall  also  prepare 
such  reports  and  statements  as  are  required  by  law. 
'  He  shall  make  out,  twenty  days  before  any  election 
of  directors,  a  complete  list  of  the  stockholders  en- 
titled to  vote  at  such  election,  arranged  in  alphabeti- 
cal order  and  giving  the  number  of  shares  of  stock 
that  may  be  voted  by  each,  and  shall  keep  the  same 
open  to  inspection  at  the  ofitice  of  the  Company  un- 
til the  time  of  and  during  the  said  election.  He 
shall  allow  any  stockholder,  on  application  in  busi- 
ness hours,  to  inspect  the  stock  certificate  book,  the 
stock  transfer  book  and  the  stock  ledger. 

"He  shall  attend  to  such  correspondence  and  to 
such  other  duties  as  may  be  incidental  to  his  office 
or  be  properly  assigned  him  by  the  Board." 

The  proviso  that  stock  certificates  are  to  be  signed  by 
the  president  and  treasurer  accords  with  the  provisions  of 
the  statutes  in  New  Jersey  and  some  few  other  states.    In 

*  Conyngton  on  Corporate  Organization,  page  315. 


THE   CORPORATE  OEEICIA^S.  187 

the  majority  of  the  states  the  signatures  to  stock  certif- 
icates are  determined  entirely  by  the  by-laws  and  the  sec- 
retary is  commonly  one  of  the  signing  officials.     (See  § 

31.)       • 

The  secretary  usually  has  the  seal  of  the  company  in 

his  sole  charge/  though  it  is  sometimes  otherwise  provided 

by  the  charter  or  by-laws.     Ordinarily  he  should  not  let 

the  seal  go  out  of  the  company's  office  save  in  his  own 

custody,  or  otherwise  only  when  directed  by  resolution  of 

the  board. 

The  general  rule  as  to  the  use  of  the  seal  is  that  alf 
instruments  that  require  a  seal  when  executed  by  an  in- 
dividual, require  the  corporate  seal  when  executed  by  a 
corporation.  It  is  customary,  however,  to  use  the  cor- 
porate seal  on  all  formal  corporate  instruments.  It  is  also 
used  on  stock  certificates,  and  it  may  be  said  generally  that 
its  use  on  any  corporate  instrument  is  not  legally  objec- 
tionable. (See  §  15;  also  comment  on  Forms  144,  145.) 
In  event  of  the  absence  or  disability  of  the  secretary,  the 
board  of  directors  may  authorize  any  other  officer  or  agent 
of  the  company  to  affix  the  seal.  The  mere  impression  of 
the  seal  upon  the  paper,  without  the  use  of  wax  or  wafer, 
is  sufficient.  Almost  any  duly  authorized  device  or  im- 
pression intended  to  serve  as  a  corporate  seal  will  be  recog- 
nized by  the  courts  as  such. 

The  secretary  is  distinctively  the  recording  officer  of 
the  corporation,  and  is  the  custodian  of  the  minute  book 
and  usually  of  all  other  corporate  records  save  those  per- 
taining to  the  financial  transactions  of  the  corporation. 

The  seal  and  the  corporate  books  should  be  kept  in  the 
office  of  the  corporation.  The  director*;  are  entitled  to 
inspect  the  corporate  books  at  any  time,  and  the  secretary 
should  also  extend  this  privilege  to  the  stockholders  to 
such  extent  as  is  (i)  prescribed  by  the  statutes,  (2)  by  the 

*  Ellison  V.  Branstrator,  153  Ind.   146   (1899). 


188  DIRECTORS  AND  OFFICERS. 

by-laws  or  usage  of  the  corporation,  (3)  by  order  of  a 
court  having  jurisdiction.  If  he  wrongfully  refuses  to  al- 
low inspection  of  the  corporate  records  h^  will  be  liable  in 
damages.^  (See  §§  35,  147.)  When  the  secretary's  term 
of  office  expires,  or  prior  thereto  if  he  resigns  or  is  re- 
moved, he  must  surrender  the  corporate  records  even 
though  he  may  have  paid  for  them  out  of  his  own  pocket.^ 

It  is  most  desirable  that  the  secretary  be  informed  as 
to  all  ordinary  matters  of  corporate  procedure.  Not  only 
is  this  required  for  the  proper  discharge  of  his  own  offi- 
cial duties,  but  he  is  usually  expected  to  supply  his  official 
associates  with  information  as  to  details  of  corporate  man- 
agement. 

The  secretary  will  find  a  practical  work  on  corporate 
procedure  of  much  assistance.  In  addition  he  should  have 
a  copy  or  a  digest  of  the  statutes  of  the  state  as  far  as  these 
relate  to  corporations.  A  manual  of  parliamentary  pro- 
cedure will  also  be  found  useful.  Where  the  statute  law 
modifies  or  adds  to  the  general  or  common  law,  or  requires 
additional  formalities,  such  data  should  be  noted  on  the 
margins  of  the  proper  pages  of  the  secretary's  book  on  cor- 
porate procedure  in  order  to  make  it  complete  for  that 
particular  state.  A  volume  so  annotated  will  be  found  in- 
valuable for  the  use  of  the  corporate  officials. 

A  corporate  calendar  or  some  equivalent  (See  Form 
198)  is  almost  indispensible  to  the  proper  discharge  of  the 
secretary's  duties.  The  dates  and  data  of  this  calendar 
will  vary  in  the  different  states.  They  are  also  varied  by 
the  charter  or  by-law  requirements  of  the  particular  cor- 
poration. 

§  154.     The  Treasurer. 

"When  not  otherwise  prescribed  by  the  state  laws  or 

•Legendre  v.  N.  O.  Brewing  Assn.,  45'  La.  Ann.  669  (1893);  Fuller  v.  Hollander, 
47  Atl.   (N.  J.)  646   (1900). 

•  State  V.  Goll,  i2  N.  J.  I,.  285  (1867). 


THE  CORPORATE  0FFICIAI,S.  189 

by  the  charter  or  by-laws  of  the  corporation,  any  person 
who  may  act  as  agent  for  another  is  eligible  to  act  as 
treasurer  of  the  corporation.  Thus  in  the  absence  of  pro- 
hibition, a  married  woman,  a  minor,  an  alien,  one  of  its 
directors  or  even  another  corporation  might  be  elected  and 
legally  serve  as  its  treasurer.  Nor  does  election  to  an- 
other office  in  the  same  corporation  in  itself  disqualify  an 
incumbent  to  act  as  treasurer,  provided  the  duties  of  the 
two  offices  do  not  conflict. 

"In  the  smaller  corporations  the  treasurer  is  usually 
either  acting  bookkeeper  or  has  direct  control  of  the  books 
of  account  and  keeps  his  own  special  books  as  well.  A 
knowledge  of  bookkeeping  and  of  the  financial  duties  con- 
nected with  his  office  is  then  a  necessary  qualification. 

"In  the  larger  corporations  the  treasurer's  duties  do 
not  usually  include  the  details  of  accounting.  These  de- 
volve upon  subordinate  employees  or  are  perhaps  relegated 
to  an  accounting  department,  leaving  the  treasurer  free  to 
devote  his  attention  to  the  general  oversight  and  manage- 
ment of  the  corporate  finances  and  financial  affairs.  A 
knowledge  of  accounts  and  bookkeeping,  though  desirable, 
is  not  then  so  essential. "^° 

The  following  by-law  extract  presents  an  excellent 
synopsis  of  the  usual  duties  of  the  treasurer :" 

"The  Treasurer  shall  have  the  custody  of,  and  be 
responsible  for,  all  moneys  and  securities  of  the 
Company;  shall  keep  full  and  accurate  records  and 
accounts  in  books  belonging  to  the  Company,  show- 
ing the  transactions  of  the  Company,  its  accounts, 
liabilities  and  financial  condition,  and  shall  see  that 
all  expenditures  are  duly  authorized  and  are  evi- 
denced by  proper  receipts  and  vouchers.  He  shall 
deposit  in  the  name  of  the  Company  in  such  deposi- 
tory or  depositories  as  are  approved  by  the  Direc- 
tors, all  moneys  that  may  come  into  his  hands  for 

"  Bentley  on  Corporate  Finance  &  Accounting,  page  32. 
"  Conyngton  on  Corporate  Organization,  pages  315-316. 


190  DIRECTORS  AND  OI^FICEJRS. 

the  Company  account.  His  books  and  accounts 
shall  be  open  at  all  times  during  business  hours  to 
the  inspection  of  any  Director  of  the  Company. 

"The  Treasurer  shall  also  endorse  for  collection 
or  deposit  all  bills,  notes,  checks  and  other  negotia- 
ble instruments  of  the  Company;  shall  pay  out 
money  as  may  be  necessary  in  the  transactions  of 
the  Company,  either  by  special  or  general  direction 
of  the  Board  of  Directors,  and  on  checks  signed  by 
the  President  and  himself,  and  shall  generally,  to- 
gether with  the  President,  have  supervision  of  the 
finances  of  the  Company. 

"He  shall  also  make  a  full  report  of  the  financial 
condition  of  the  Company  for  the  annual  meeting  of 
stockholders,  and  shall  make  such  other  reports  and 
statements  as  may  be  required  of  him  by  the  Board 
of  Directors  or  by  the  laws  of  the  State. 

"He  shall  give  bond  in  the  sum  of  five  thousand 
dollars,  with  sureties  satisfactory  to  the  Board  of 
Directors,  for  the  faithful  performance  of  his  duties 
and  for  the  restoration  to  the  Company  in  event  of 
his  death,  resignation  or  removal  from  of^ce,  of  all 
books,  papers,  vouchers,  money  and  other  property 
belonging  to  the  Company  that  may  have  come  into 
his  custody." 

The  first  and  most  important  function  of  the  treasurer 
is  to  care  for  the  corporate  funds. ^^  For  their  safe-keep- 
ing he  is  personally  responsible  and  to  this  end  he  is  re- 
quired to  exercise  all  such  reasonable  vigilance  as  a  care- 
ful man  of  business  would  employ  in  safe-guarding  his  own 
funds. 

Whenever  the  treasurer's  position  involves  the  hand- 
ling or  possession  of  large  sums  of  money  or  of  consider- 
able property  values  belonging  to  the  corporation,  he 
should  be  required  to  give  bond,  the  amount  depending 
upon  the  value  passing  through  his  hands  and  the  particu- 
lar conditions.     In  a  small  corporation  or  one  where  the 

"  Second  Ave.  R.  R.  Co.  v.  Coleman,  24  Barb.   (N.  Y.)   300   (1857). 


the;  corporate  officials.  191 

responsibilities  of  the  treasurer  are  light,  a  bond  is  an  un- 
necessary formality. 

Any  regulations  as  to  bank  deposits  and  the  signature 
to  checks  should  be  slated  clearly  in  the  by-laws.  At  the 
first  meeting  of  directors  a  resolution  should  be  passed  in 
accordance  with  these  by-law  provisions,  directing  that  the 
funds  of  the  company  be  deposited  in  a  designated  bank  or 
banks.  (See  Forms  38,  84,  85.)  The  deposit  is  then 
opened  as  directed  by  this  resolution.  The  corporate  funds 
should  be  deposited  in  the  corporate  name.  Under  no  cir- 
cumstances should  the  treasurer  deposit  funds  of  the  com- 
pany in  his  own  name  or  in  his  name  as  treasurer,  or 
mingle  them  in  any  manner  with  his  own. 

The  treasurer  has,  as  a  matter  of  course,  charge  of  the 
corporate  books  of  account.  These  he  must  surrender  on 
the  termination  of  his  treasurership,  to  his  duly  appointed 
successor,  even  though  they  may  have  been  purchased 
with  his  personal  funds. ^^ 

The  treasurer  is  directly  responsible  to  the  board  of  di- 
rectors and  must  obey  any  instructions  within  its  powers. 
Also  the  individual  members  of  the  board  have  the  right 
at  any  reasonable  time  to  examine  the  books  and  accounts 
of  the  company  and  to  make  any  proper  enquiries  of  the 
treasurer,  but  they  have  no  power  to  instruct  him  or  inter- 
fere with  the  proper  discharge  of  his  duties.^'* 

§  155.     Chairman  of  the  Board. 

In  addition  to  the  officers  already  named,  provision  is 
sometimes  made  for  a  chairman  of  the  board.  His  first 
and  frequently  only  duty  is  to  preside  at  all  meetings  of  di- 
rectors. In  some  cases  he  is  given  much  of  the  authority 
that  usually  belongs  to  the  president,  whose  position  then 
becomes   either   subordinate   or   largely   honorary.      The 

"  State  V.   Goll,  32  N.  J.  h.  285    (1867). 

"People  V,  Throop,   12  Wend.    (N.  Y.)    183   (1834). 


192  DIRECTORS  AND  OI^FICERS. 

duties  of  the  chairman  of  the  board  are  usually  determined 
entirely  by  the  by-laws. 

§  156.     Managing  Director. 

Occasionally  a  member  of  the  board  is  appointed  to  the 
active  management  of  the  corporate  affairs,  and  is  then 
termed  a  "managing  director."  His  powers  are  strictly 
defined  by  the  terms  of  his  appointment. 

The  managing  director  is  the  direct  representative  of 
the  board  and  his  position  is  usually  equal  to  or  superior 
to  that  of  the  president.  It  is  of  much  greater  dignity  and 
responsibility  than  the  position  of  general  manager,  though 
the  managing  director's  duties  may  and  sometimes  do  in- 
clude those  generally  assigned  to  the  general  manager. 

The  appointment  of  the  managing  director  is  usually 
provided  for  and  his  duties  fixed  by  by-law  provisions. 
These  should  be  as  clear  and  complete  as  possible.  The 
duties  of  the  position  are  not  so  definite  or  so  well  under- 
stood as  those  of  the  other  corporate  officials,  and  custom 
cannot  be  relied  upon  to  supply  missing  details  or  settle 
conflicts. 

§  157.     General  Manager. 

The  general  manager,  while  an  officer  of  the  company, 
is  not  one  of  the  executive  officers.  He  has  usually  no 
concern  with  the  general  corporate  affairs  or  finances,  but 
is  appointed  to  take  charge  of  its  ordinary  business,  which 
he  manages  exactly  as  he  would  were  he  employed  by  a 
firm  or  an  individual.  His  powers  and  duties  are  limited 
to  the  transaction  of  the  particular  business  in  which  the 
company  is  engaged,  and,  unless  expressly  given  him,  he 
has  no  power  to  contract  for  the  compan}'  outside  its  rou- 
tine business. 

If  the  by-laws  do  not  specifically  provide  for  the  elec- 


THE   CORPORATE  OEEICIALS.  193 

tion  of  a  general  manager,  the  board  still  has  authority  to 
appoint  or  employ  such  an  official  and  prescribe  his  duties 
and  salary  just  as  it  might  employ  any  other  necessary 
agent  or  employee  of  the  company. 

§  158.     Counsel. 

In  the  larger  corporations  one  or  more  attorneys  are 
usually  retained  as  a  permanent  feature  of  the  manage- 
ment. In  the  smaller  corporations  such  regular  employ- 
ment is  not  usual,  the  board  being  left  to  employ  counsel 
at  such  times  and  on  such  terms  as  may  be  expedient. 

Sometimes  payment  of  counsel  is  made  entirely  con- 
tingent on  services  rendered.  Usually,  however,  a  re- 
tainer is  paid  to  cover  general  advice  and  consultation, 
w^ith  the  understanding  that  anything  beyond  this,  such  as 
drafting  contracts,  conducting  litigation  or  other  active 
legal  assistance,  shall  be  paid  for  at  the  regular  rates. 

The  counsel  of  the  company  has  usually  no  authority 
over  the  company  affairs  save  in  connection  w^ith  litigation 
which  the  board  of  directors  has  authorized  him  to  under- 
take, or  in  special  matters  which  have  been  placed  in  his 
hands. 

§  159.     Auditor. 

In  the  larger  corporations  it  is  customary  to  elect  an 
auditor,  whose  duty  it  is  to  devise  and  supervise  the  whole 
system  of  corporate  accounts.  He  should  of  necessity  be 
an  expert  accountant.  His  specific  duties  are  usually  fixed 
by  the  board  of  directors,  or  the  finance  committee  when 
one  exists. 

Where  the  operations  of  the  corporation  are  not  suffi- 
cient to  justify  the  permanent  employment  of  an  auditor, 
it  is  usual  to  provide  for  periodical  audits  of  the  corporate 
accounts.     Such  audit  should  be  made  by  a  professional 


194  SIia(CT0R6  AND  0FFICSR«. 

accountant  accustomed  to  the  work  and  whose  reputation 
and  standing  will  insure  an  accurate  and  proper  report. 
The  superficial  examination  and  report  made  by  the  usual 
auditing  committee  of  directors  is  of  but  little  practical 
value. 


PART    V.^MISCELLANEOUS    CORPORATE 
MATTERS. 


CHAPTER   XIX. 
MINUTES  AND  OTHER  CORPORATE  RECORDS. 


§  1 60.     The  Corporate  Books. 

The  financial  records  of  a  corporation  are  much  the 
same  as  those  of  a  firm  or  individual.  Some  of  their  en- 
tries and  accounts  are  peculiar  to  the  corporation  but  the 
books  do  not  differ  from  those  of  any  other  form  of  busi- 
ness organization.  The  discussion  of  the  books  of  ac- 
count is  outside  the  province  of  the  present  volume.^ 

The  more  important  books  of  record  peculiar  to  the 
corporation  are  the  minute  book  (See  §  161 ;  Forms  37,  38, 
109-114),  the  stock  certificate  book  (See  §  34;  Forms  16- 
20),  the  transfer  book  (See  §  36;  Forms  190,  191)  and 
the  stock  book  and  stock  ledger  (See  §35;  Forms  192, 
193),  which  are  kept  by  the  secretary  of  the  corporation. 
In  addition  to  these,  conditions  may  arise  which  require 
one  or  more  of  the  following  books, — subscription  book 
(See  §  167),  instalment  book  (See  §  167,  Form  194),  in- 
stalment scrip  book  (See  §167;  Form  8),  dividend  book  or 
register  (See  §  168;  Form  195)  and  bond  and  coupon  regis- 
ters. (See  §  168.)  These  books  are  usually  kept  by  the 
treasurer  of  the  corporation. 

'  For  an  excellent  discussion  of  the  corporate  accounts,  see  Bentley'i  "Corporat* 
Finance  &  Accounting." 

195 


196  MISCELI.ANEOUS    CORPORATE    MATTERS. 

(a)  Minutes. 

§  i6i.    The  Minute  Book. 

The  minute  book  of  a  corporation  properly  kept  is  legal 
evidence  of  the  proceedings  of  its  stockholders'  and  di- 
rectors' meetings.  The  secretary  is  its  custodian  and  its 
entries  should  be  made  by  him  alone.  Any  director  has 
the  right  to  inspect  this  book  at  any  suitable  time.  A 
stockholder  usually  does  not  have  this  right. 

The  minute  book  is  ordinarily  a  blank  book  of  the  style 
termed  "record"  by  stationers.  It  may  be  had  at  any 
price  from  plainly  bound  books  at  fifty  cents  or  less,  up  to 
elaborately  bound  and  specially  printed  books  costing  from 
five  to  tv^enty-five  dollars  or  even  more.  A  reasonably 
good  and  substantially  bound  book  is  always  to  be  desired. 

The  minute  book  varies  in  size  and  general  form  ac- 
cording to  the  taste  or  requirements  of  the  secretary.  A 
common  and  convenient  form  is  8K  by  13  inches.  Some- 
times the  book  is  specially  made,  of  a  size  and  style  to 
match  the  other  corporate  records.  For  a  small  corpora- 
tion with  few  meetings,  a  book  containing  one  hundred 
pages  will  usually  be  found  ample. 

When  the  minutes  are  kept  in  a  sut)Stantially  bound 
volume  with  longhand  entries  succeeding  each  other  in 
regular  order,  later  additions  or  insertions  are  difficult  if 
not  impossible,  and  their  evidence  as  to  proceedings  at  the 
company's  meetings  is  difficult  to  controvert. 

Minutes  are,  however,  not  infrequently  written  with 
the  typewriter  on  sheets  of  thin  paper,  which  are  then 
pasted  in  the  minute  book.  Also  at  times  loose-leaf  min- 
ute books  are  employed,  in  which  the  pages  may  be  re- 
moved, and,  after  the  minutes  are  written  upon  them,  be 
reinserted  in  the  book.  When  either  of  these  plans  is 
followed,  substitutions  and  alterations  in  the  minutes  may 
be  made  with  comparative  ease  and  their  value  as  evi- 
dence is  diminished. 


MINUTES  AND  OTHER  CORPORATE  RECORDS.         197 

To  avoid  this  objection  to  the  convenient  loose-leaf 
minute  book,  each  page  is  sometimes  water-marked  with 
its  proper  number  in  such  manner  that  substitution  is  ex- 
tremely difficult  and  practically  impossible.  The  same  end 
is  sometimes  accomplished  by  the  inscription  of  the  presi- 
dent's and  secretary's  signatures  or  initials  on  each  page, 
making  substitution  without  the  participation  of  these 
officials  impossible.  It  is  obvious  that  this  latter  method 
of  verification  may  also  be  effectively  employed  when  min- 
utes are  pasted  into  the  minute  book. 

§  162.     Contents  of  Minute  Book. 

A  copy  of  the  company's  charter  or  certificate  of  in- 
corporation is  usually  entered  on  the  first  pages  of  the 
minute  book.  This  may  be  a  copy  certified  by  the  Sec- 
retary of  State,  bound  or  pasted  into  the  oook,  or,  equally 
sufficient,  a  careful  and  legible  copy  written  in  the  book 
by  the  secretary,  or,  if  written  on  separate  sheets,  bound 
or  pasted  into  the  minute  book.  If  the  copy  is  made  by 
him,  the  secretary  usually  certifies  to  its  correctness. 

Following  the  charter  come  the  by-laws  of  the  com- 
pany. These  begin  at  the  top  of  the  next  right-hand  page 
and  should  also  be  a  careful  and  legible  copy,  or  a  copy 
bound  or  pasted  in,  followed  by  the  secretary's  certificate 
as  to  the  accuracy  of  the  transcription.     (See  Form  25.) 

A  few  pages  immediately  following  the  by-laws  should 
be  left  blank  for  the  entry  of  any  amendments.  Then 
follow  the  minutes  of  the  first  meeting  of  stockholders 
closely  followed  by  the  proceedings  of  the  first  meeting 
of  directors,  and  thereafter  the  minutes  of  stockholders' 
and  directors'  meetings  in  due  sequence  as  held,  each  with 
its  distinctive  heading.  Each  meeting  should  begin  at 
the  top  of  its  proper  page  and  no  blank  pages  should  be 
left  between  the  records  of  the  different  meetings. 

In  the  larger  corporations  separate  minute  books  are 


198  MISCELLANEOUS    CORPORATE    MATTERS. 

provided  for  stockholders'  and  directors'  minutes  and  also 
for  the  minutes  of  standing  committees.  In  the  smaller 
corporations  a  single  minute  book  will  usually  suffice. 

§  163.     Form  and  Subject  Matter  of  Minutes. 

The  secretary  should  spare  no  pains  to  secure  accuracy 
in  his  minutes  as  they  are  the  legal  evidence  of  the  pro- 
ceedings of  the  meetings  recorded  and  the  authority  for 
any  action  of  the  officers  required  thereby. 

The  minutes  given  in  the  present  volume  (See  Forms 
37,  38,  109-114)  are  in  conventional  form.  Any  clear 
statement  of  the  proceedings  is,  however,  legally  sufficient, 
though  a  reasonably  close  adherence  to  the  conventional 
arrangement  is  desirable. 

It  is  usual  to  enter  on  the  minutes  of  directors'  meet- 
ings the  names  of  those  present.  Save  in  the  case  of  very 
small  corporations,  this  is  not  customary  or  necessary  in 
the  case  of  stockholders'  meetings.  The  secretary  should, 
however,  preserve  the  lists  (See  Form  99)  showing  the 
names  of  stockholders  present  at  meetings. 

During  the  progress  of  meetings,  letters,  reports  and 
other  instruments  are  frequently  presented.  When  of  im- 
portance, the  secretary  is  usually  instructed  to  enter  these 
upon  the  minutes.  If  not  instructed,  he  may  use  his  dis- 
cretion. If  the  matters  to  which  they  relate  are  important, 
they  should  usually  be  spread  upon  the  minutes,  i.  e.  en- 
tered in  full.  Generally,  however,  it  is  sufficient  if  the  in- 
struments be  filed  and  preserved,  such  reference  being 
made  to  them  in  the  minutes  as  the  conditions  may  de- 
mand. 

When  reports  or  other  instruments  are  ordered  spread 
upon  the  minutes,  the  secretary  may  usually  exercise  his 
discretion  as  to  whether  they  shall  be  included  in  the  body 
of  the  minutes  or  follow  immediately  after  them.  If,  how- 
ever, the  motion  or  order  directs  that  the  instrument  fol- 


MINUTES  AND  OTHER  CORPORATE  RECORDS.  199 

low  the  minutes,  or  that  it  appear  in  the  body  of  the  min- 
utes, the  secretary  should  comply  with  the  letter  of  his 
instructions. 

§  164.     Recording  the  Proceedings. 

The  corporate  minutes  are  a  record  of  the  transactions 
of  corporate  meetings, — a  record  of  what  is  done,  not  of 
what  is  said;  and  the  record  should  usually  be  as  concise 
and  accurate  as  possible. 

If  a  motion  or  resolution  is  passed  upon  at  a  meeting, 
no  matter  whether  adopted  or  rejected,  its  disposition 
should  be  recorded,  but,  speaking  generally,  the  debate  and 
discussion  should  not  be  set  down,  nor  are  the  names  of 
the  parties  by  whom  minor  motions  or  resolutions  are 
made  or  seconded  of  sufficient  importance  to  be  entered, 
nor  need  any  record  be  made  of  those  voting  for  or  against 
any  such  matter. 

It  may  be  said  further  that  when  the  presiding  officer 
decides  that  a  motion  or  a  resolution  is  properly  before  the 
meeting  and  puts  it  to  vote,  the  fact  that  the  names  of  the 
parties  who  moved  and  seconded  it  or  who  voted  for  or 
against  it,  are  not  recorded,  does  not  affect  the  force  of  the 
corporate  action.  If,  however,  a  motion  or  a  resolution 
is  of  importance,  or  is  contested,  or  of  such  a  nature  that 
it  may  thereafter  be  of  importance  to  know  by  whom  the 
matter  was  introduced  and  by  whom  it  was  favored  and 
opposed,  the  record  should  be  made  in  full.  (See  Ch. 
XXXI.) 

It  sometimes  happens  that  a  stockholder  or  a  member 
opposing  some  proposed  action  wishes  his  objections  or 
protest  recorded  in  the  minutes.  If  his  objections  are  per- 
tinent and  not  too  lengthy,  this  should  usually  be  per- 
mitted, but  the  secretary  should  not  enter  any  such  objec- 
tions upon  his  record  unless  so  directed  by  a  vote  of  the 
meeting  or  by  unopposed  direction  of  the  presiding  officer. 


200  MISCEI/LANEOUS    CORPORATE    MATTERS. 

The  objecting  member  sometimes  files  his  protest  in 
writing  and  in  such  case  the  document  should  be  received 
and  filed  in  the  usual  course  of  business,  and  this  fact  be 
noted  in  the  minutes.  In  some  cases  it  is  necessary  for  a 
member  of  the  board  to  have  the  dissent  to  proposed  ac- 
tion noted  in  order  to  avoid  liability.  In  such  case  he  has 
a  right  to  demand  its  entry  upon  the  minutes,  and,  if  re- 
fused, may  force  its  entry  by  proper  legal  procedure. 

Motions  are  not  usually  entered  verbatim.  It  is  suffi- 
cient if  their  sense  is  preserved.  Resolutions  are.  how^- 
ever,  more  formal  and  should  usually  be  entered  in  the 
exact  form  in  v^hich  they  are  adopted.  (See  Forms  74- 
98.)  The  presiding  officer  of  the  meeting  may  always  re- 
quire resolutions  and  important  motions  to  be  reduced  to 
writing  before  consideration,  and  if  he  does  this  the  work 
of  the  secretary  is  greatly  lightened. 

All  papers  presented  to  or  used  at  meetings  should  be 
filed  for  future  reference  in  the  custody  of  the  secretary 
unless  otherwise  ordered. 

Notes  of  the  proceedings  are  taken  as  the  meeting 
progresses  (See  Form  100),  and  these  should  be  written 
up  in  permanent  form  as  soon  after  the  meeting  as  possible 
while  the  events  are  fresh  in  the  secretary  s  mind.  Should 
he  delay  the  final  entry  of  his  record  unduly,  doubt  may 
arise  as  to  whether  the  secretary's  notes,  or  the.  record  of 
the  minute  book  is  the  original  entry,  and  if  it  should  be 
held  that  the  formal  minutes  are  not  the  original  entry, 
their  value  as  evidence  is  destroyed. 

As  soon  as  the  minutes  are  duly  entered  m  the  min- 
ute book,  they  should  be  signed  with  the  official  signatures 
of  the  secretary  and  the  presiding  officer  of  the  meeting, 
the  secretary  usually  signing  at  the  right  and  the  presiding 
officer  at  the  left. 


MINUTES  AND  OTHER  CORPORATE  RECORDS.  201 

§  165.     Approval  and  Amendment  of  Minutes. 

Minutes  should  be  approved  by  the  body  whose  pro- 
ceedings they  record.  The  approval  of  stockholders' 
minutes  by  the  board  of  directors  is  absolutely  ineffective 
as  is  also  the  approval  of  directors'  minutes  by  the  stock- 
holders, save  by  way  of  endorsement  or  ratification  of  the 
directors'  action  recorded  therein. 

The  minutes  of  a  stockholders'  annual  or  special  meet- 
ing cannot  be  approved  at  a  subsequent  special  meeting 
unless  such  approval  is  noted  in  the  call  and  notice,  but  the 
minutes  of  any  preceding  stockholders'  meetings,  whether 
annual  or  special,  may  always  be  appro\ed  at  the  stock- 
holders' annual  meeting.  Likewise  the  approval  ot  the 
minutes  of  a  directors'  regular  or  special  meeting  at  a  sub- 
sequent special  meeting  is  effective  if  such  approval  was 
duly  notified  as  one  of  the  purposes  of  the  meeting  (See 
§§  128,  129),  while  any  unapproved  minutes  of  directors' 
meetings  may  always  be  approved  at  a  regular  meeting  of 
directors.     (See  §  134.) 

The  minutes  of  a  stockholders'  meeting  are  usually  not 
passed  upon  until  the  following  annual  meeting,  when  all 
unapproved  minutes  should  be  read  and,  if  no  objections 
are  offered,  approved.  (See  §  88.)  Directors'  mmutes 
likewise  are  usually  only  approved  at  regular  meetings. 
The  approval  of  minutes  relieves  the  secretary  of  all  di- 
rect responsibility  for  the  accuracy  of  their  record  and 
also  serves  as  a  ratification  of  the  proceedings  recorded 
therein.^ 

When  minutes  are  approved,  no  record  need  be  made 
save  the  statement  in  the  minutes  of  the  meeting  then  in 
progress  that  the  minutes  of  the  previous  meeting  or  meet- 
ings, giving  their  dates,  were  read  and  approved.  Usu- 
ally, however,   for  convenience  the   secretary  also   notes 

•Delano  v.  Trustees,  138  Mass.  63  (1884);  County  Court  v.  Ry.  Co.,  35  Fed.  Rep. 
161    (1888). 


202  MISCEl«I«ANEOUS    CORPORATE    MATTERS. 

at  the  bottom  of  each  set  of  approved  minutes  the  proper 
facts  as  "Approved  at  the  annual  meeting  of  stockholders 
held  January  loth,  1909." 

If  corrections  of  minutes  are  ordered  (See  §  88),  the 
minutes  of  the  meeting  then  in  session  should  show  ex- 
actly what  corrections  were  directed  and  m  what  minutes. 
In  the  corrected  minutes  the  alteration  should  appear  in 
red  and  a  marginal  note  should  give  the  date  of  the  meet- 
ing at  which  such  correction  was  directed.  Red  lines  may 
be  drawn  through  any  part  ordered  stricken  out  and  any 
correction  be  interlined,  but  no  erasure  should  be  made  in 
any  case,  as  the  corrected  minutes  should  show  both  the 
error  and  the  correction. 

Sometimes  it  happens  that  those  present  at  a  meeting 
decide,  contrary  to  the  facts,  that  the  secretary  has  made 
errors  in  his  record  of  a  preceding  meeting,  and  move  that 
a  portion  of  the  minutes  be  stricken  out  or  corrected. 
Whether  right  or  wrong,  if  the  majority  of  those  present 
at  the  meeting  vote  in  favor  of  the  motion,  the  secretary 
must  carry  it  into  effect.  In  such  case  he  should  draw 
red  lines  through  the  part  ordered  stricken  out  and  inter- 
line in  red  any  matter  ordered  inserted,  and  make  the 
proper  entry  in  the  margin  of  the  minutes.  This  then 
shows  the  whole  matter;  that  the  record  was  made  in  one 
way,  and  was,  at  a  later  date,  ordered  changed.  The  min- 
utes of  the  meeting  at  which  such  change  was  ordered 
should  also  give  a  complete  statement  of  tue  matter. 

§  166.     "Cut  and  Dried  Minutes." 

The  annual  meeting  of  stockholders  is  frequently  held 
in  a  locality  distant  from  the  residence  of  the  parties  really 
in  interest,  as  for  instance  the  meetings  of  the  non-resident 
corporations  of  New  Jersey,  Maine  and  many  other  states, 
which  must  be  held  within  the  state  of  incorporation. 
Also  there  are  many  corporations  in  which  the  whole  or 


MINUTES  AND  OTHER  CORPORATE  RECORDS.  203 

the  greater  part  of  the  stock  is  held  by  combinations  and 
the  subordinate  corporations  only  hold  such  meetings  as 
are  essential  to  maintain  their  legal  existence.  In  these 
and  in  many  other  cases  the  only  necessity  for  meetings 
is  to  give  the  proper  legal  expression  to  matters  that  are 
already  determined,  and  it  is  possible  to  write  out  the  en- 
tire minutes  in  advance. 

The  proceedings  at  such  meetings  are  simple.  A  con- 
trolling interest,  usually  in  the  shape  of  proxies,  is  sent  or 
taken  to  the  place  of  meeting.  If  the  regular  officers  are 
not  present  or  are  not  authorized  to  act,  officials  for  the 
meeting  are  appointed  at  the  time  by  those  holding  these 
proxies.  The  prepared  minutes  are  then  read  and  agreed 
to,  the  meeting  is  adjourned  and  the  accepted  minutes, 
signed  by  the  officials  who  acted  at  the  meeting,  are  re- 
turned to  the  secretary  of  the  company  and  preserved  in 
his  minute  book. 

(b)  Other  Corporate  Records. 

§  167.     Subscription  and  Instalment  Books. 

The  subscription  book  is  nothing  more  than  the  or- 
dinary subscription  list  (See  Forms  1-3),  followed  by 
pages  properly  ruled  for  the  entry  of  subscriptions,  the 
whole  bound  into  a  single  volume. 

The  instalment  scrip  or  instalment  certificate  book  is  a 
book  of  blank  instalment  certificates  (See  Forms  8-10)  at- 
tached to  the  proper  stubs,  the  whole  book  being  similar 
in  plan  and  arrangement  to  the  stock  certificate  book.  The 
scrip  or  certificates  of  this  book  are  issued  as  instalments 
are  paid  on  stock  subscriptions  in  evidence  thereof.  When 
all  the  instalments  are  paid  and  the  regular  stock  certif- 
icates are  issued  to  the  subscribers,  these  receipts  are  sur- 
rendered to  the  secretary  and  are  by  him  cancelled  and 
pasted  to  their  proper  stubs  in  the  instalment  scrip  book. 

The  instalment  book  is  a  book  in  which  a  record  is  kept 


204  MISCELLANElOUS    CORPORATE    MATTERS. 

of  each  instalment  due  on  subscriptions  when  subscrip- 
tions are  so  payable.  The  arrangement  and  manner  of 
keeping  this  book  is  shown  under  Form  194. 

§  168.     Dividend  Book  and  Bond  Register. 

The  dividend  book  contains  for  each  dividend  declared, 
a  list  of  the  stockholders  with  their  respective  stockhold- 
ings, the  amount  due  each,  the  date  of  its  payment,  and 
finally  the  stockholder's  receipt  therefor.  (See  Form 
195.)  In  the  larger  corporations  and  in  many  of  the 
smaller  ones,  the  book  is  not  kept  at  all,  dividend  checks 
and  vouchers  taking  its  place. 

The  bond  register  is  a  book  of  record  in  which  are  en- 
tered the  data  relating  to  bond  issues,  showmg  for  each 
bond,  its  number,  date,  names  of  the  parlies  to  whom  is- 
sued, any  transfers,  and  the  due  dates  and  amounts  of  in- 
terest payments..  The  coupon  register  is,  as  its  name  in- 
dicates, a  book  in  which  coupons,  clipped  and  presented 
for  payment,  are,  after  cancellation,  pasted  in  convenient 
form  for  subsequent  reference." 


•  For   forms   of   these   books    see    Bentley's    "Corporate    Finance    &   Accounting," 
pages   129-134. 


CHAPTER    XX. 
DIVIDENDS. 


§  169.     Declaration  of  Dividends. 

Profits  are  the  only  proper  source  of  dividends.  The 
declaration  of  dividends  when  there  are  no  profits  is  con- 
trary to  law^,  usually  involves  a  personal  liability  to  the 
parties  responsible,  and  in  many  states  involves  a  criminal 
liability  as  vv^ell.  If  an  illegal  dividend  is  contemplated, 
any  stockholder  may  enjoin  its  declaration  or  payment,  and 
should  the  company  become  insolvent,  the  stockholders 
w^ho  receive  such  dividends  may  be  compelled  to  make 
restitution.^ 

The  declaration  of  dividends  rests  entirely  in  the  dis- 
cretion of  the  board  unless  otherw^ise  provided  by  statutes, 
charter  or  by-laws.^  It  is  but  seldom  if  ever  that  the 
stockholders  can  compel  the  directors  against  their  judg- 
ment to  declare  a  dividend,  even  though  liberal  reserva- 
tions of  profits  are  being  made  for  working  capital  or  as  a 
surplus  fund  for  future  contingencies.  "The  courts  have, 
no  doubt,  in  many  cases  overruled  the  directors  who  pro- 
posed to  pay  dividends,  but  I  am  not  aware  of  any  case  in 
which  the  court  has  compelled  them  to  pay  when  they  have 
expressed  their  opinion  that  the  state  of  the  accounts  did 
not  admit  of  any  such  payment."^ 

There  is,  however,  a  point  at  which  the  courts  will  in- 

12  Cook  on  Corp..  S  4S8;  Stevens  v.  U.  S.  Steel  Corp.,  68  N.  J.  Eq.  373  (1905). 
» Hunter  v.   Roberts,  Throp  &  Co.,   83   Mich.   63    (1890);   Burden  v.   Burden,    159 
N.  Y.  287  (1899);  New  York,  etc.  R.  K.  v.  Nickals,  119  U.  S.  296   (1886). 
•  Bond  V.  Barrow,  etc.  Co.,  86  L.  T.  Rep.  10  (1902). 

205 


206  MISCEl^IvANSOUS    CORPORATE    MATTERS. 

terfere,  but  this  point  is  not  ordinarily  reached  until  bad 
faith  on  the  part  of  the  directors  can  be  shown.  "The  di- 
rectors must  act  in  good  faith.  If  they  fail  to  do  so  and  it 
clearly  appears  that  they  have  accumulated  earnings  not 
required  in  the  prosecution  of  the  business  which  they 
withhold  from  the  stockholders  for  illegitimate  purposes, 
a  court  of  equity  may  interfere  and  compel  a  distribution 
of  such  earnings.'"^ 

As  between  holders  of  the  same  class  of  stock,  dividends 
must  always  be  equal.  Particular  stockholders  cannot  be 
favored  in  any  way  as  to  time,  amount  or  manner  of  pay- 
ment. Different  classes  of  stock  may,  however,  be  created 
with  different  rights  as  to  dividends.     (See  §  29.) 

Dividends  are  declared  by  resolution  of  the  board  and 
are  usually  fixed  at  a  certain  percentage  of  the  par  value 
of  the  outstanding  stock,  though  not  infrequently  at  a  cer- 
tain number  of  dollars  per  share.  The  dividend  is  usually 
made  payable  at  some  specified  future  date  to  stockholders 
of  record  at  some  earlier  date,  also  specified.  (See 
Forms  123-129.)  This  effective  date  of  dividends  cannot 
be  fixed  prior  to  the  date  of  declaration.  Thus  the  direc- 
tors could  not  November  ist,  declare  a  dividend  payable  to 
stockholders  shown  to  be  such  by  the  books  of  the  com- 
pany on  the  15th  of  the  preceding  October.^  Any  such 
power  would,  it  is  obvious,  open  a  wide  door  for  injustice 
and  fraud. 

When  a  dividend  is  once  declared,  it  becomes  an  in- 
debtedness of  the  corporation  and  the  corporation  cannot 
thereafter  rescind  the  resolution  nor  recall  the  dividend. 
(See  §  172.)  Also  if  the  funds  necessary  to  pay  a  dividend 
are  actually  set  aside  for  the  purpose,  they  cease  to  belong 
to  the  company,  and,  in  accordance  with  the  terms  of  the 
declaration,  become  the  property  of  the  stockholders.^ 

*  Matter  of  Rogers,  161  N.  Y.  108   (1899). 
•Tones  v.  Terre  Haute,  etc.  R.  R.,  57  N.  Y.  196  (1874). 

•King  V.  Paterson,  etc.  R.  R..  29  N.  J.  L-  82  (1860);  Hunt  v.  O'Shea,  69  N.  H. 
600  (1899);  Pollard  v.  First  Nat.  Bank,  47  Kans.  406  (1891). 


DIVIDiCNDS.  207 

§  170.     Form  of  Dividends. 

Dividends  are  usually  payable  in  cash  and,  unless  other- 
wise stated,  cash  payment  is  always  understood.  Actual 
cash  is  not,  however,  essential  to  the  declaration  or  even  to 
the  payment  of  a  dividend.  "The  surplus  may  be  in  cash 
and  then  it  may  be  divided  in  cash.  It  may  be  in  property 
and  if  the  property  is  so  situated  that  a  division  thereof 
among  the  stockholders  is  practicable,  a  dividend  in  prop- 
erty may  be  declared  and  that  may  be  distributed  among 
the  stockholders."^  Or  if  the  property  is  not  in  form  for 
direct  distribution  among  the  stockholders,  it  may  be  sold, 
or  be  used  as  the  security  for  a  loan,  and  the  cash  secured 
be  used  in  payment  of  dividends.  Or  scrip,  bonds  or  stock 
may  be  issued  against  this  property  and  be  declared  as 
dividends.  So  long  as  every  dollar  of  dividends  is  taken 
directly  from,  or  is  represented  by  an  equal  amount  of 
actual  profits,  the  form  of  the  dividend  is  immaterial.* 

Profits  earned  and  invested  or  passed  over  to  surplus 
in  years  of  prosperity,  do  not  lose  their  character  as  profits, 
but  if  no  profits  are  made  in  subsequent  years  may  be 
drawn  on  for  dividends.  Also  profits  for  the  current  year, 
though  expended  upon  betterments  or,  as  stated,  existing 
in  the  form  of  property,  may  be  made  the  basis  of  divi- 
dends.^ 

An  exception  to  the  general  rule  that  dividends  impair- 
ing capital  may  not  be  paid,  is  found  in  the  case  of  com- 
panies working  mines  or  operating  under  leases,  patent 
rights,  etc.  Here  the  corporation  is  organized  for  the  ex- 
press purpose  of  working  out  the  property  which  repre- 
sents its  capital,  and  the  impairment  and  final  exhaustion 
of  this  property  is  the  object  of  the  corporate  operations. 

'Williams  v.  W.  U.  Tel.  Co.,  93  N.  Y.  162  (1863). 
•  Rose  V.  Barclay,  191  Pa.  St.  594  (1899). 

•Beers  v.  Bridgeport  Spring  Co.,  42  Conn.  17  (187S);  Williams  v.  W.  U.  Tel.  Co., 
93  N^  y,  162  (1883). 


208  MiscEiiivANEous  corporate;  matters. 

Hence,  if  the  company  is  solvent  and  its  receipts  from  legi- 
timate operation  are  in  excess  of  its  expenditures,  these  re- 
ceipts may  be  treated  as  profits  and  be  declared  as  divi- 
dends.io 

Dividends  when  declared  should  be  duly  notified  to  the 
stockholders.  (See  Forms  123-129.)  Notice  of  dividends 
may  be  sent  by  mail  or  may  be  published,  though  notice  by 
publication  may  not  in  itself  be  sufficient. ^^  In  many  cor- 
porations dividend  checks  are  sent  to  the  stockholders  and 
the  form  of  notice  is  not  then  of  the  same  importance.  The 
notice  to  be  given  of  dividends  may  be  prescribed  by  the 
by-laws  but  is  usually  left  to  the  discretion  of  the  treasurer 
or  otherwise  is  fixed  by  resolution  of  the  board.  Dividend 
notices  are  usually  signed  by  the  treasurer  but  are  at  times 
and  not  improperly  signed  by  the  secretary. 

§  171.     Pa5niient  of  Dividends. 

Dividends  as  usually  declared  are  to  be  paid  to  stock- 
holders who  appear  of  record  on  a  certain  date.  It  is  cus- 
tomary at  the  close  of  business  on  that  day,  to  close  the 
stock  books  to  transfers  for  a  prescribed  time  in  order  to 
give  the  treasurer  an  undisturbed  opportunity  to  make  up 
his  dividend  statement.     (See  §  37.) 

As  soon  as  the  stock  books  are  closed,  or  otherwise,  as 
soon  as  the  proper  date  is  reached,  the  treasurer  is  fur- 
nished by  the  secretary  with  a  list  of  the  stockholders  of 
record  as  they  appear  upon  that  date,  or  otherwise  the 
stock  books  are  turned  over  to  the  treasurer  in  order  that 
he  may  secure  the  names  and  addresses  of  the  stockholders 
himself.  The  treasurer  then  makes  up  his  dividend  state- 
ment, showing  the  stock  held  by  each  stockholder  and  the 
amount  of  dividends  due  him.  (See  Form  195.)  The 
checks  for  dividends  (Form  154)  are  made  out  in  accord- 

i»Lee  V.  Neuchatel  Asphalte  Co.,  L.  R.  41  Ch.  D.  1   (1889). 
"  King  V.  Paterson,  etc.  Co.,  29  N.  J.  i^.  82  (1860). 


DIVIDENDS.  209 

ance  with  this  statement  and  on  the  appointed  date  are 
mailed  to  the  parties  to  whom  they  belong,  or  otherwise 
the  stockholders  are  notified  to  call  and  receive  their  divi- 
dends in  person. 

When  the  stockholders  are  required  to  call  in  person  for 
dividends,  they  usually  receipt  for  the  same  upon  the  divi- 
dend book.  If  the  cheeks  are  mailed,  receipt  forms  are 
sometimes  sent  with  them,  to  be  signed  and  returned  by 
the  recipient.  Usually  and  preferably,  however,  the  check 
itself  is  deemed  an  all-sufficient  receipt. 

Dividends  are  always  payable  to  the  owner  of  stock 
who  appears  of  record  upon  the  books  of  the  company  on 
the  day  on  which  the  dividend  becomes  effective.  Thus  a 
dividend  might  be  declared  payable  December  15th  to 
stockholders  who  are  of  record  November  4th.  Then  if 
no  stipulations  are  made  as  to  the  ownership  of  the  divi- 
dend, stock  transferred  before  November  4th  carries  the 
dividend  with  it,  but  stock  transferred  after  November  4th 
does  not.^^ 

It  sometimes  happens,  however,  that  a  party  owns 
stock  on  the  effective  date  of  the  dividend,  evidenced  by 
assigned  certificates,  but  has  neglected  to  have  this  stock 
transferred  to  his  name  on  the  books  of  the  company.  His 
dividends  will  then  be  credited,  and,  unless  due  notice  of 
the  conditions  is  filed  by  the  real  owner,  be  paid  to  the 
holder  of  record.  This  latter  must,  however,  account  to 
the  real  owner  of  the  stock  for  any  dividends  received  after 
the  termination  of  his  equitable  ownership  of  the  stock. 

Difficult  questions  sometimes  arise  as  to  respective 
rights  of  life-tenants  of  stock  and  the  remainder  man  as  to 
the  ownership  of  dividends,  particularly  when  these  divi- 
dends are  declared  in  the  form  of  stock,  scrip  or  bonds. 
Speaking  generally,  the  life-tenant  has  a  right  to  all  divi- 
dends declared  while  his  life-tenancy  continues. 

Where  stock  has  been  pledged,  the  dividend  must  be 

"Corgan  V.  Ivee  Coal  Co.,  218  Pa.  St.  386  (1907). 


210  MISCElvLANElOUS    CORPORATE    MATTERS. 

paid  to  the  party  to  whom  the  stock  is  pledged  if  the  com- 
pany has  been  properly  notified.  (See  §  42.)  This 
pledgee,  however,  must  account  to  the  real  owner  of  the 
stock  for  any  such  dividends  at  the  time  the  pledge  is  re- 
deemed. 

§  172.     Illegal  Dividends. 

Illegal  dividends  are  of  three  classes:  (i)  Those  de- 
clared in  disregard  of  the  rights  of  some  of  the  stockhold- 
ers; (2)  those  declared  in  violation  of  charter  or  by-law 
provisions  of  the  particular  corporation;  (3)  those  which 
either  impair  the  capital  stock^^  or  threaten  the  solvency  of 
the  corporation.  The  declaration  of  an  illegal  dividend  or 
the  payment  of  an  illegal  dividend  already  declared  may  be 
enjoined  and  stopped  by  proper  action  of  the  stockholders. 

In  most  of  the  states  a  liability  is  imposed  by  statute 
upon  the  directors  and  officers  for  any  violation  of  laws 
regulating  dividends.  (See  §§  122,  123,  147.)  The  treas- 
urer is  not,  however,  personally  liable  in  any  way  for  the 
payment  of  dividends  in  obedience  to  a  proper  resolution 
of  the  board — unless  he  knows  such  dividends  to  be  abso- 
lutely fraudulent — save  in  a  few  states  where  the  liability 
for  dividends  prohibited  by  statute  has  been  extended  by 
express  enactment  to  the  executive  officers  of  the  corpora- 
tion if  they  consent  thereto  or  concur  therein. 

The  general  rule  that  a  resolution  declaring  a  dividend 
cannot  be  rescinded  does  not  apply  in  the  case  of  resolu- 
tions authorizing  illegal  dividends.  Such  dividends  may 
be  rescinded  at  any  time  before  their  actual  payment. 


»  Goodnow  V.  Am.  Writing  Paper  Co.,  69  Atl.  Rep.  (N.  J.)   1014  (1908). 


CHAPTER   XXI. 

CONSOLIDATION,    REORGANIZATION    AND 
DISSOLUTION. 


§  173.     Forms  of  Consolidation. 

The  methods  by  which  corporations  may  be  practically 
unified  are  as  follows : 

1.  Consolidation  of  one  or  more  corporations  by 
statutory  procedure. 

2.  Purchase  by  a  corporation  of  the  entire  assets 
of  one  or  more  other  corporations. 

3.  Lease  by  a  corporation  of  the  entire  property 
of  one  or  more  other  corporations,  usually  for  a 
specified  amount  or  a  guaranteed  dividend. 

4.  Purchase  by  a  corporation  of  a  stock  control 
in  one  or  more  other  corporations. 

5.  Combination,  usually  by  means  of  a  holding 
company.^ 

The  terms  "consolidation,"  "combination,"  "merger" 
and  "amalgamation"  are  loosely  applied  to  any  of  the  fore- 
going plans  for  joining  the  interests  of  two  or  more  cor- 
porations. Strictly  speaking,  a  consolidation  is  the  com- 
bination or  merging  by  procedure  prescribed  by  the  stat- 
utes, of  two  or  more  corporations  into  a  single  new  or- 
ganization embracing  the  respective  interests  and  property 
of  the  merged  corporations.^  Such  consolidation  without 
statutory  authority  is  ultra  vires  and  hence  void,  unless  au- 
thorized by  unanimous  vote  of  all  the  stockholders. 

*  Noyes'  Intercorporate  Relations,   §   1. 

'Green's  Brice's  Ultra  Vires  (Second  Edition),  §  631. 

211 


212  MISCBI^LANEOUS    CORPORATE    MATTEJRS. 

In  any  case  where  it  is  desired  to  unify  corporate  busi- 
nesses, careful  study  of  all  the  circumstances  and  local 
statutes  should  be  made  before  deciding  on  the  method  to 
be  followed,  in  order  on  the  one  hand  to  avoid  violation  of 
statutory  provisions,  and  on  the  other  hand  to  secure  the 
most  effective  possible  combination. 

§  174.     Statutory^  Consolidation. 

In  nearly  all  the  states  provision  is  made  for  the  con- 
solidation of  non-competing  railroads.  Not  so  many  have 
statutes  authorizing  consolidation  of  business  corporations. 
Such  statutes,  when  they  exist,  are  usually  made  to  apply 
only  to  corporations  engaged  in  the  same  or  similar  busi- 
ness. Under  such  provisions  a  gas  company  and  an  elec- 
tric-light company  have  been  held  competent  to  consoli- 
date. Ordinary  business  corporations  rarely  combine  un- 
der the  statutory  provisions,  as  it  is  usually  simpler  to  unite 
by  some  other  method. 

Where  there  are  statutes  providing  for  consolidation, 
it  is  usually  specified  that  a  majority  or  two-thirds  or  three- 
fourths  of  the  stockholders  must  vote  in  favor  of  such  ac- 
tion. In  many  of  the  states  dissenting  stockholders  may 
require  the  corporation  to  purchase  their  stock  at  an  ap- 
praised valuation.  If  there  is  no  statutory  form  for  con- 
solidation, it  may,  unless  in  some  way  prohibited,  always 
be  authorized  by  the  unanimous  vote  of  all  the  stockhold- 
ers. 

The  usual  procedure  for  statutory  consolidation  is  as 
follows:  (i)  Agreement  as  to  terms  by  directors  of  the 
consolidating  corporations;  (2)  submission  of  directors' 
agreement  to  the  stockholders  of  each  company  at  a  duly 
assembled  meeting;  (3)  assent  of  the  stockholders  to  the 
directors*  agreement  by  a  required  vote ;  (4)  filing  of  cer- 
tified copies  of  the  agreement  and  the  vote  in  its  favor  in 


CONSOUDATION,   REORGANIZATION   AND  DISSOLUTION.         21 3 

the  same  offices  in  which  the  original  certificate  of  incor- 
poration of  each  of  the  consolidated  corporations  was  filed. 

§  175.     Consolidation  by  Sale  or  Lease  of  Assets. 

(a)  Sale  of  Assets.  When  all  the  stockholders  consent, 
a  business  corporation — as  distinguished  from  a  public 
utilities  corporation — may  sell  its  entire  assets  for  the 
stock  of  another  corporation.  The  first  corporation  may 
then  dissolve  and  divide  its  assets — which  consist  of  the 
stock  of  the  other  corporation — among  its  stockholders. 
The  purchasing  corporation  then  continues  both  its  own 
business  and  the  business  of  the  dissolved  corporation,  the 
stockholders  of  the  defunct  corporation  now  holding  their 
proportionate  interest  in  the  operating  corporation. 

This  is  the  simplest  and  best  method  of  effecting  a  con- 
solidation. The  only  obstacle  to  its  use  is  found  in  the 
fact  that  one  dissenting  stockholder  can  interpose  and  pre- 
vent the  consummation  of  the  plan.  In  such  case  it  is 
often  possible  to  buy  out  the  dissenting  stockholder  or 
stockholders,  and  carry  out  the  consolidation  as  proposed. 

A  public  utilities  corporation  having  a  franchise  derived 
from  the  public  is  not  free  to  sell  it  at  pleasure.  In  such 
cases  consolidation  must  be  effected  in  some  other  way. 

(b)  Lease  of  Property.  A  lease  of  the  entire  property 
of  a  prosperous  corporation  may  only  be  made  by  unani- 
mous consent  of  all  its  stockholders,  and  consolidation  by 
means  of  a  lease  contract  is  therefore  only  available  where 
consolidation  could  be  effected  by  sale  of  the  corporate  as- 
sets as  already  discussed. 

A  corporation  that  is  in  a  failing  condition  may,  how- 
ever, lease  its  property  by  action  of  its  directors,  or  of  a 
majority  of  its  stockholders  when  such  lease  is  for  the  best 
interests  of  the  creditors  and  stockholders,^  and  in  this 

•Skinner  v.  Smith,  134  N.  Y.  240  (1892);  Bartholomew  v.  Derby  Rubber  Co.,  69 
Conn.  521    (1897). 


214*  MISCELI^ANEOUS    CORPORATE    MATTERS. 

case  a  practical  consolidation  by  means  of  a  lease  is  pos- 
sible. 

In  many  cases  railroads  are  empowered  to  lease  their 
properties,  and  such  action  may  be  authorized  by  majority 
vote  of  the  stockholders.  A  practical  consolidation  by 
means  of  a  lease  is  then  possible."^ 

Where  a  valid  lease  of  a  corporation's  entire  property 
is  made,  the  lessor  corporation's  only  active  business 
operations  are  then  the  reception  of  its  rentals  and  the  ap- 
portionment of  these  among  its  stockholders  as  dividends. 
In  some  cases  property  is  leased  on  the  basis  of  a  guaranty 
of  a  certain  dividend  on  the  stock  of  the  lessor  corpora- 
tion. 

§  176.     Consolidation  by  Purchase  of  Controlling  Interest. 

When  it  is  desired  to  unify  the  operations  of  two  or 
more  corporations,  it  may  be  done  by  the  common  owner- 
ship of  a  controlling  interest  in  each  corporation.  This 
controlling  interest  may  be  in  the  hands  of  an  individual, 
a  syndicate  or  a  holding  corporation. 

The  approved  form  is  by  means  of  a  holding  corpora- 
tion, formed  under  the  laws  of  New  Jersey,  New  York, 
Maine,  Delaware  or  some  other  state  where  corporations 
are  empowered  to  hold  the  stock  of  other  corporations. 
This  "holding  company"  buys  up  a  majority  of  the  stock 
of  the  companies  which  it  is  desired  to  unite.  At  the  next 
annual  elections  of  these  controlled  corporations  boards 
of  dummy  directors  are  elected,  who  manage  the  different 
combined  corporations  along  common  and  non-conflicting 
lines  in  accordance  with  the  instructions  of  the  holding 
corporation. 

The  plan  is  a  very  effective  method  of  forming  a  trust. 


*Dady  v.  Georgia,  etc.  Ry.,  112  Fed.  838  (1900). 


CONSOLIDATION,  REORGANIZATION  AND  DlSSOtUTlON.        2l5 

§  177.     Combinations. 

This  is  a  very  general  term  embracing  pooling  agree- 
ments, trusts,  the  different  forms  of  holding  companies, 
*and  general  associations  to  prevent  competition,  maintain 
prices  and  limit  production.  The  original  plan  oi  a  board 
of  trustees  holding  controlling  interests  in  the  corpora- 
tions to  be  combined  was  held  illegal.^  Partnership  agree- 
ments between  corporations  have  likewise  been  held 
illegal.^ 

The  federal  statutes  and  the  statutes  of  almost  every 
state  in  the  Union  prohibit  and  provide  for  punishment  of 
combinations  in  restraint  of  trade  or  for  purposes  of  pre- 
venting competition.  As  yet,  in  most  states  of  the  Union, 
it  is  not  difficult  to  evade  these  prohibitions.  The  subject 
is  too  extensive  to  permit  of  treatment  here. 

§  178.     Reorganization. 

Reorganization  is  generally  employed  as  a  means  of 
rehabilitating  a  corporation  that  has  failed  or  become 
financially  embarrassed  or  entangled,  when  its  name,  prop- 
erty, franchises,  trade-marks  or  good-will  are  still  worth 
saving.  The  term  is  loosely  applied  to  various  forms  of 
consolidation,  new  incorporations  and  similar  arrange- 
ments. 

Reorganization  is  not  uncommon  in  the  case  of  rail- 
roads and  other  public  service  corporations.  The  fran- 
chises of  these  corporations  must  usually  be  operated  or 
they  are  lost,  and  stockholders  and  creditors  are,  as  a  rule, 
better  satisfied  to  have  the  corporation  continue  in  some 
reorganized  form  under  which  they  still  have  an  interest 
or  recognized  claim,  even  though  reduced,  than  to  permit 

•State  V.  Standard  Oil,  49  Ohio  137  (1892);  People  v.  North  River  Sugar  Re- 
fining  Co.,    121    N.    Y.    582    (1890). 

•Bishop  V.  Am.  Preservers  Co.,  157  111.  284  (1895);  Mallory  v.  Oil  Works,  86 
Tenn.  598   (1888). 


216  MISCELLANEOUS    CORPORATE    MATTERS. 

the  corporate  assets  to  be  sold  for  the  inadequate  prices 
of  a  forced  sale,  or  lapse  for  non-user. 

Reorganization  is  also  not  infrequent  in  the  case  of 
insolvent  or  embarrassed  business  corporations  when  the 
creditors  consent  to  some  adjustment  or  arrangement  of 
their  claims  that  will  permit  the  corporate  business  to  con- 
tinue. The  reorganization  in  such  case  may  be  limited 
to  a  mere  issue  of  additional  stock  or  bonds,  or  may  extend 
so  far  as  to  be  in  effect  a  new  incorporation. 

If  such  reorganization  is  not  possible  and  the  business 
of  the  embarrassed  corporation  is  of  sufficient  value,  the 
usual  plan  pursued  is  for  all,  or  the  principal  stockholders 
of  the  old  corporation  to  form  a  new  and  entirely  distinct 
corporation.  The  property  and  business  of  the  embar- 
rassed corporation  are  then  allowed  to  go  to  forced  sale 
and  are  bought  in  as  nearly  in  their  entirety  as  possible 
by  the  new  corporation.  This  latter  then  takes  a  clear 
title  to  these  assets  and  conducts  the  business  thereafter 
free  from  all  claims  of  creditors  or  stockholders  of  the  old 
corporation.  A  similar  procedure  is  sometimes  improp- 
erly employed  in  order  to  "freeze  out"  small  or  objection- 
able stockholders,  the  corporation  being  deliberately  in- 
volved or  allowed  to  be  involved  for  the  purpose. 

§  179.     Dissolution. 

A  corporation  may  be  dissolved  by  the  expiration  of 
the  term  for  which  the  charter  was  granted.  This  does 
not,  however,  often  happen.  If  the  corporation  is  active 
and  prosperous,  some  form  of  reorganization  or  extension 
of  the  corporate  existence  is  effected  before  the  expiration 
of  its  charter  period.  If  it  is  not  profitable,  it  is  usually 
dissolved  or  allowed  to  lapse  long  before  its  charter  term 
expires. 

A  corporation  may  also  be  dissolved  by  insolvency.  In 
such  case  a  receiver  may  be  appointed  to  dispose  of  its 


CONSOLIDATION,  REORGANIZATION  AND  DISSOLUTION.        217 

assets  and  divide  the  proceeds  among  its  creditors,  or  the 
corporation  may  be  allowed  to  go  into  bankruptcy  and  its 
affairs  be  wound  up  by  a  trustee.  Even  though  a  cor- 
poration is  insolvent,  it  may  be  rescued  from  dissolution 
by  an  abatement  of  the  creditors'  claims,  or  by  the  con- 
tribution of  additional  capital  by  stockholders  or  others. 

A  corporation  may  always  be  dissolved  and  its  affairs 
be  wound  up  by  proper  procedure  if  all  its  stockholders 
consent.  In  many  states  a  majority  of  the  stockholders — 
and  in  some  states  less  than  a  majority — may  dissolve  the 
corporation  under  some  circumstances  by  prescribed  statu- 
tory procedure. 

Corporations  destitute  of  assets  are  sometimes  prac- 
tically dissolved,  or  allowed  to  lapse,  by  simply  ceasing  to 
transact  business.  Such  corporations  are  not  technically 
out  of  existence  and  in  some  cases  their  officers  are  still 
subject  to  liabilities.  The  procedure  is,  however,  easy  and 
inexpensive  and  many  corporations  end  in  this  manner 
regardless  of  the  possible  liabilities  of  their  officials. 


PART  VI.— FORMS  RELATING  TO  INCORPORA- 
TION. 


CHAPTER  XXII. 
SUBSCRIPTION  LISTS  AND  RECEIPTS. 


(a)  Subscription  Lists. 

Subscription  lists  or  agreements  are  construed  liberally 
by  the  courts  in  accordance  with  their  intent.  They 
should,  however,  contain  a  clear  and  reasonably  complete 
statement  of  the  conditions  under  which  the  subscriptions 
are  made,  as  tending  directly  to  prevent  the  necessity  of 
court  interpretation. 

Any  material  misrepresentations  or  any  material 
changes  of  the  conditions  set  out  in  a  subscription  list  re- 
lease subscribers  unless  in  the  latter  case  the  changes  are 
made  with  their  consent.  What  constitutes  a  material 
change  will  depend  upon  the  conditions.  A  change  of 
capitalization  would  ordinarily  be  material;  a  change  of 
name  usually  would  not. 

Any  person  competent  to  contract  may  make  a  binding 
subscription  for  stock.  A  corporation  cannot,  unless  by 
express  provision  of  the  statutes  or  its  charter  it  is  al- 
lowed to  purchase  and  hold  stock  of  other  corporations. 
When  this  is  the  case  it  may  subscribe  as  freely  as  an  in- 
dividual, though  it  may  not  act  as  an  incorporator. 

When  a  subscription  list  overruns  a  single  sheet,  addi- 

218 


SUBSCRIPTION  USTS  AND  RECEIPTS.  219 

tional  sheets  similarly  ruled  may  be  pasted  on  below,  or 
be  bound  up  with  the  first  sheet  so  that  the  pages  follow 
each  other  in  regular  sequence.  When  capitalizations  ar^ 
large  and  many  subscribers  are  to  be  secured,  subscription 
books  are  sometimes  employed,  but  usually  separate  lists 
are  printed  or  typewritten  so  that  they  may  be  circulated 
independently.  In  such  case  it  is  customary  to  provide 
that  the  signatures  of  subscribers  may  be  aflfixed  to  the 
separate  instruments  with  the  same  legal  effect  and  obli- 
gation as  if  all  were  affixed  to  a  single  instrument,  (See 
Form  3.) 

Form  I. — Subscription  List.     Simple  Form. 

Subscription  List. 
HOPKINS  METAL  WORKING  COMPANY. 


To  be  Incorporated  under  the  Laws  of  New  Jersey. 


Capital    Stock $500,000. 

Shares $100  each. 


We,  the  undersigned,  hereby  severally  subscribe  at  the  par  value 
thereof  for  the  number  of  shares  of  the  Capital  Stock  of  the  Hopkins 
Metal  Working  Company  set  opposite  our  respective  names,  and  agree 
to  pay  for  the  same  in  cash  on  demand  of  its  Treasurer  so  soon  as  said 
Company  is  organized. 

New  York  City,  October  1st,  1908. 


NAMES. 

ADDRESSES.                           SHARES. 

AMOUNT. 

Harry  H.  Burton .... 
William  McCIellan... 

20  Broad  St.,  New  York..           20 
36  West  23rd  St.,  New  York          10 

$2,000 

1,000 

This  subscription  list  is  informal  but  will  be  found  suf- 
ficient where  the  purposes  and  conditions  of  the  subscrip- 
tion are  well  understood.  It  is  to  be  noted  that  subscrip- 
tions under  it — as  is  true  of  most  of  the  usual  forms  of 
subscription  agreements — are  not  binding  until  the  com- 
pany has  been  incorporated.     (See  §  30.)     Prior  thereto 


220  FORMS  RELATING  TO  INCORPORATION. 

they  are  merely  continuing  propositions  to  a  corporation 
which  is  not  yet  organized  and  is  therefore  incapable  of 
becoming  a  party  to  a  contract.  Hence  until  incorpora- 
tion such  subscriptions  may  be  revoked  at  the  will  of  the 
subscribers. 

This  possibility  of  revocation  may  be  avoided  by  the 
appointment  of  trustees  or  a  committee  of  organization 
to  act  as  the  other  party  or  parties  to  the  subscription 
agreement.  The  contract  is  then  primarily  between  the 
trustees  and  the  subscribers,  and  subscriptions,  subject  to 
the  terms  of  the  agreement,  are  binding  and  irrevocable 
from  the  time  they  are  made.  When  organized,  the  cor- 
poration takes  the  place  of  the  trustees  and  the  contract 
is  then  between  the  subscribers  and  the  corporation. 

Form  2. — Subscription  Agreement.     Trustees'. 

Subscription  Agreement, 
THE  HARTFORD  MACHINE  WORKS. 


To  be  Incorporated  under  the  Laws  of  Connecticut. 


Capital    Stock $1,000,000. 

Common    Stock $750,000. 

Preferred    Stock . . .  .$250,000. 
Shares.... $100  each. 


We,  the  undersigned,  hereby  severally  agree  with  John  M.  Staunton 
and  Henry  F.  Furman,  Trustees  for  the  incorporation  of  The  Hartford 
Machine  Works,  to  subscribe  and  do  hereby  subscribe  for  the  number  of 
shares  of  the  Common  Stock  of  said  Company  set  opposite  our  respective 
signatures,  and  agree  to  pay  the  par  value  thereof  as  follows : 

Ten  (10%)  Per  Cent,  on  demand  to  John  M.  Staunton  and  Henry 
F.  Furman,  as  Trustees  for  the  said  Company,  such  payment,  or  so  much 
thereof  as  may  be  necessary,  to  be  used  for  the  preliminary  and  incor- 
porating expenses  of  the  said  Company;  Thirty  (30%)  Per  Cent,  to  the 
Treasurer  of  the  Company  on  demand  ten  days  after  the  incorporation 
of  said  Company,  and  the  remainder  at  such  times  and  in  such  instal- 
ments as  may  be  prescribed  by  the  Board  of  Directors. 

New  York  City,  September  15th,  1908. 


DATE.  NAMES. 


Aug.  15.  I  Nathan  C.  Gardin  220  Broadway,  New  York 


ADDRESSES. 


SHARES.  AMOUNT. 


25 


$2,500 


SUBSCRIPTION  USTS  AND  RECEIPTS.  221 

Frequently  subscription  agreements  provide  that  sub- 
scriptions thereunder  are  not  effective  unless  a  certain 
specified  amount  is  secured.  Also  in  many  states  the 
Statutes  require  that  a  certain  proportion  of  the  capital 
stock  shall  be  subscribed  before  the  corporation  may  begin 
its  business  operations.  In  either  case  the  subscribers, 
unless  restrained  by  the  terms  or  form  of  the  agreement, 
may  cancel  their  subscriptions  at  any  time  before  the  re- 
quired amount  in  bona  fide  subscriptions  has  been  secured. 

It  must  also  be  noted  that  unless  the  statutes  of  the 
state  or  the  charter  of  the  particular  corporation  provides 
that  the  corporation  may  begin  business  when  but  a  por- 
tion of  its  capital  stock  is  subscribed,  or  unless  the  sub- 
scription list  itself  provides  that  subscriptions  shall  be  due 
and  payable  sooner,  subscriptions  are  not  enforceable  until 
the  total  authorized  capital  stock  is  subscribed  in  full. 

Some  time  limit  is  usually  fixed  in  an  agreement  of  this 
nature  w^ithin  which  the  prescribed  minimum  must  be 
raised.  If  not,  a  failure  to  raise  the  minimum  within  a 
reasonable  time  will  in  itself  release  the  subscribers. 

Form  3. — Subscription  Agreement.     Conditional.     Stock 
Bonus. 


Subscription  Agreement. 
THE  HARVARD  STEAMSHIP  COMPANY. 


A  Corporation  to  be  Organized  under  the  Laws  of  the  State  of  New  York 

for  the  Operation  of  a  Steamship  Line  between  New  York 

City,  New  Orleans  and  Intermediate  Points. 


Capital   Stock $10,000,000. 

Common  Stock ....  $7,000,000. 

Preferred  Stock..  .$3,000,000. 

Shares.... $100  each. 


We,  the  undersigned,  hereby  agree  with  John  H.  Leigh  and  Howard 
P.  Moran,  as  Trustees  for  the  incorporation  of  The  Harvard  Steamship 


222  J'ORMS  REI^ATING  TO  INCORPORATION. 

Company,  to  subscribe  and  do  hereby  severally  subscribe  for  the  number 
of  shares  of  the  Six  Per  Cent.,  Cumulative  Preferred  Stock  of  said  Com- 
pany set  opposite  our  respective  signatures,  and  agree  to  pay  the  value 
thereof  as  follows:  Twenty-five  (25%)  Per  Cent,  of  the  amount  of  our 
respective  subscriptions  ninety  days  after  the  organization  of  said  Com- 
pany; Twenty-five  (25%)  Per  Cent,  ninety  days  after  the  date  of  said 
first  payment,  and  the  balance  at  such  times  and  in  such  amounts  as  may 
be  required  by  the  Board  of  Directors  of  said  Company. 

The  subscriptions  of  this  agreement  are  conditioned  as  follows : 

1st.  That  bona  fide  subscriptions  hereunder  to  the  amount  of  Five 
Hundred  Thousand  ($500,000)  Dollars  shall  have  been  secured  on  or  be- 
fore the  2nd  day  of  January,  1909. 

2nd.  That  the  complete  organization  of  the  Company  shall  have 
been  effected  on  or  before  the  1st  day  of  February,  1909. 

And  in  case  of  the  failure  of  either  of  these  conditions,  the  subscrip- 
tions hereunder  are  to  be  null,  void  and  of  no  effect. 

It  is  further  understood  and  agreed  and  is  a  condition  of  the  sub- 
scriptions hereunder,  that  for  each  share  of  Preferred  Stock  hereby  sub- 
scribed for,  and  paid  for  in  accordance  with  the  terms  of  subscription,  the 
subscriber  is  to  receive  as  a  bonus  and  without  further  payment,  one  share 
of  the  full-paid  and  non-assessable  Common  Stock  of  the  said  Company. 

For  the  purposes  of  this  agreement,  the  1st  day  of  February,  1909, 
shall  be  considered  the  date  of  organization  of  said  Company,  provided  its 
organization  has  been  effected  on  or  before  that  date. 

It  is  agreed  that  this  instrument  may  be  executed  in  separate  instru- 
ments with  the  same  force  and  effect  and  individual  obligation  as  if  all  the 
signatures  thereto  were  affixed  to  a  single  instrument. 

New  York  City,  September  1st,  1908. 


DATE. 

NAMES.                               ADDRESSES. 

SHARES. 

AMOUNT. 

Sept.  5... 

Schuyler  H.  Wilson..  Morristown,  N.  J. 

500 

$5,000 

Under  the  agreement  given  above  subscriptions  cannot 
be  withdrawn  by  the  subscribers  but  are  not  payable  until 
the  subscription  conditions  have  been  fulfilled,  and  in  case 
of  failure  are  entirely  cancelled. 

Form  4. — Subscription  Blank.     Individual. 


Subscription  Beank. 
THE  NEWARK  HARDWARE  COMPANY. 


225  Montgomery  St.,  Newark,  New  Jersey. 


Capital  Stock $100,000. 

Shares $100  each. 


I  hereby  subscribe  for  Twenty-five   (25)   shares  of  the  Capital  Stock 
of  The  Newark  Hardware  Company  at  the  par  value  thereof  and  agree 


SUBSCRIPTION  LISTS  AND  RECEIPTS.  223 

to  pay  Fifty  (50%)  Per  cent,  of  said  subscription  on  demand  of  its  Treas- 
urer so  soon  as  said  Company  is  incorporated ;  the  remainder  to  be  paid 
at  such  times  and  in  such  amounts,  not  exceeding  Ten  (10%)  Per  Cent, 
of  said  subscription  in  any  one  month,  as  may  be  required  by  the  Board 
of  Directors  of  said  Company. 

Dated,  October  10th,  1908.  Harry  F.  Du  Bois, 

210  Washington  Avenue, 

Easton,  Pennsylvania. 
1. . . . 

When  subscriptions  are  to  be  obtained  from  parties 
widely  scattered  or  at  a  distance,  an  individual  subscrip- 
tion blank  is  usually  desirable  and  is  circulated  together 
with  such  statements  and  prospectuses  as  may  be  neces- 
sary, which  are  then  in  effect  a  part  of  the  subscription 
agreement. 

Subscriptions  to  the  stock  of  a  corporation  already 
formed  are  at  once  binding  and  payable  in  accordance  with 
their  terms.  In  New  York,  however,  by  statute  provision 
any  such  subscription  must  be  accompanied  by  at  least  ten 
per  cent,  of  its  amount  before  it  is  binding.  * 

A  form  of  individual  subscription  blank  very  frequently 
used  after  organization  is  as  follows : 

Form  5. — Subscription  Blank.     After  Organization. 

Subscription  Blank. 
OREGON  DEVELOPMENT  COMPANY. 


Portland,  Oregon. 
Eastern  Office :     10  Wall  Street,  New  York  City. 

Capital  Stock $500,000. 

Shares $10  each. 


Enclosed  find  certified  check  for 

payment  for Shares  of  the  full-paid  and 

non-assessable  Stock  of  the  Oregon  Development  Company  to  be  issued  in 
the  name  and  mailed  to  the  address  given  below. 


Dated. 


Make  checks  payable  to  order  of  the  Company.  The  right  is  reserved 
to  reject  or  pro-rate  subscriptions.  Give  full  name  of  party  to  whom 
stock  is  to  be  issued. 


224  FORMS  RELATING  TO  INCORPORATION. 

The  foregoing  blank  will  usually  be  sent  out  together 
with  a  prospectus  giving  full  details  of  the  company  and 
of  the  subscription.  As  will  be  noted  the  right  is  expressly 
reserved  to  reject  any  objectionable  subscriptions,  or,  in 
case  of  an  over  subscription,  to  pro-rate  the  same. 

Form  6. — Application  for  Stock.     Instalment  Payments. 


Application   for    Stock. 

JOHN  McNEIL  MANUFACTURING  CORPORATION. 

325   Main   Street,  Trenton,  New  Jersey. 


I  hereby  make  application  for  Twenty-five  (25)  Shares  of  the  Capital 
Stock  of  the  John  McNeil  Manufacturing  Corporation,  a  company  or- 
ganized under  the  laws  of  the  State  of  New  Jersey  with  a  capital  stock 
of  Two  Hundred  and  Fifty  Thousand  ($250,000)  Dollars,  divided  into 
shares  of  the  par  value  of  One  Hundred  ($100)  Dollars  each,  and  agree 
to  pay  for  said  stock  the  sum  of  One  Hundred  ($100)  Dollars  per  share, 
as  follows :  Twenty  ($20)  Dollars  per  share  in  cash  and  Ten  ($10) 
Dollars  per  share  on  the  fifth  day  of  each  month  thereafter  until  the  entire 
amount  has  been  paid. 

It  is  understood  and  agreed  that  I  may  at  any  time  pay  up  any  balance 
due  hereunder  before  the  due  date  thereof  and  that  whenever  the  full 
amount  of  my  subscription  has  been  paid,  I  shall  receive  full-paid  and 
non-assessable  certificates  for  the  said  Twenty-five  (25)  Shares  of  stock. 

Check  for  $ enclosed. 

Willis  H.  McCall, 
Boonton,  New  Jersey. 

Dated  October  10th,  1908. 


Remit  by  Check,  Bank  Draft,  Express  or  Money  Order.  All  applica- 
tions are  subject  to  acceptance  by  the  John  McNeil  Manufacturing  Cor- 
poration. 


(b)  Receipts  for  Subscription  Payments. 

When  a  subscription  to  stock  is  paid  in  full,  certificates 
are  usually  issued  to  the  subscriber  at  once  and  serve  as 
a  receipt  for  the  payment.  When,  however,  payment  is 
made  before  the  organization  of  the  company,  or  is  not  in 
full,  or  the  permanent  stock  certificates  are  not  ready  for 
delivery,  receipts  must  be  given  for  the  moneys  paid,  the 
form  depending  upon  the  conditions. 

If  payments  on  subscriptions  are  to  be  made  before  in- 


SUBSCRIPTION  I,ISTS  AND  REJCEIPTS. 


225 


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226  FORMS  RElvATiNG  TO  INCORPORATION. 

corporation,  trustees  are  usually  selected  by  the  promoters 
of  the  enterprise,  are  made  parties  to  the  subscription 
agreement  and  are  authorized  to  receive  payments  on  sub- 
scriptions. (See  Forms  2,  3.)  If  this  is  not  done,  a  trustee 
might  be  selected  later  by  action  or  consent  of  the  sub- 
scribers. After  incorporation  payments  on  subscriptions 
are  as  a  matter  of  course  made  to  the  treasurer  of  the 
company  and  receipts  are  issued  by  him.  (See  Forms 
8-12.) 

Subscription  receipts  are  printed  or  otherwise  prepared 
with  blanks  for  the  variable  data,  such  as  name  of  sub- 
scriber, number  of  shares,  amount  of  payment,  etc.,  which 
are  filled  in  as  each  receipt  is  issued.  This  same  data  also 
appears  on  the  stub  of  the  receipt,  which  is  retained  as  the 
trustee's  or  treasurer's  record  of  the  transaction.  The 
receipt  and  stub  are  usually  as  a  matter  of  convenience 
bound  in  book  form. 

The  form  of  trustee's  receipt  given  (Form  7)  will  be 
found  convenient.  It  is  but  seldom  that  more  than  one 
subscription  payment  is  made  before  the  organization  of 
the  corporation  but,  if  so,  a  second  receipt  is  usually  is- 
sued. 

When  no  prior  payments  have  been  made  to  a  trustee, 
the  references  on  the  stub  of  the  following  form  to  trus- 
tee's payment  will,  of  course,  be  omitted. 

Occasionally  the  stubs  of  instalment  certificates  are 
provided  with  a  form  of  receipt  similar  to  that  of  the  stock 
certificate  stub,  to  be  signed  by  the  party  receiving  the 
scrip.  Inasmuch  as  the  scrip  is  itself  a  receipt  for  money 
paid  in,  the  secondary  receipt  is  hardly  necessary.  The 
receipt  for  a  stock  certificate  is  of  a  different  nature,  the 
stock  certificate,  save  on  original  issue,  not  being  a  receipt 
for  money  or  value  received. 

Subsequent  payments  on  subscriptions  are  sometimes 
endorsed  on  the  back  of  the  instalment  receipts  or  cer- 


SUBSCRIPTION  I,ISTS  AND  RECEIPTS. 


227 


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228  FORMS  RDI^ATING  TO  INCORPORATION. 

tificates.     In  such  case  the  ruling  shown  in  Form  9  should 
appear  on  the  back  of  the  certificate. 

Form  9. — Endorsement  of  Instalment  Payments. 


DATE. 

INSTALMENTS 
PAID. 

SIGNATURE     OE 
TREASURER. 

September  1,  1908 

October  1,  1908 

$500 
$500 

Harold  M.  Jones. 
Harold  M.  Jones. 

A  sufficient  number  of  lines  should  be  allowed  for  the 
prescribed  number  of  instalment  payments.  As  payments 
are  made  each  one  is  entered  and  is  verified  by  the  signa- 
ture of  the  treasurer  in  the  last  column.  When  this  plan 
is  followed  the  stub  of  the  certificate  should  also  have  rul- 
ings to  permit  the  same  entries  of  date  and  amount,  in 
order  that  both  certificate  and  stub  may  show  a  complete 
record  of  the  conditions. 

This  arrangement  is  satisfactory  and  convenient  but  is 
not  always  practicable,  in  which  case  a  separate  receipt 
or  certificate  is  issued  for  each  instalment  payment. 

The  form  which  follows  is  practically  a  certificate  of 
partly  paid  stock.  As  further  payments  are  made  they 
are  either  endorsed  on  the  certificate,  or  the  certificate  is 
surrendered  and  a  new  certificate  issued  in  its  stead. 

Form  10. — Instalment  Certificate. 

Organized  under  the  Laws  of  West  Virginia. 


No.  106.  60  Shares. 

STAMSWOOD   IRON   COMPANY. 

Instalment  Certificate. 

This  Certifies  that  Harold  P.  Bronson  is  entitled  to  Sixty  Shares  of 

the  Capital  Stock  of  the  Stamswood  Iron  Company  of  the  par  value  of 

One  Hundred  Dollars   each,  upon  which    Sixty-five   Per  Cent,   has  been 

paid,  and  which  is  subject  to  further  calls  and  assessments  to  the  extent 

of  Thirty-five  Per  Cent.     A  full-paid  certificate  will  be  issued  for  said 

stock  after  all  instalments  have  been   paid  and  upon   surrender   of  this 

certificate. 


SUBSCRIPTION   IvISTS  AND  RECEIPTS.  229 

Said  stock  is  transferable  only  on  the  books  of  the  Company  by  the 
stockholder  or  his  duly  authorized  attorney  upon  surrender  of  this  cer- 
tificate. 

f  CORPORATE  "I         Howard  H.  Stamswood,       John  H.   Stamswood, 
\     seal.       /  President.  Treasurer. 

Dated,  October  9,  1908. 


When  stock  subscriptions  have  been  paid  and  per- 
manent certificates  are  not  ready  for  deHvery,  temporary 
certificates  are  usually  issued.  (See  Form  12.)  If  a  less 
formal  instrument  is  preferred,  the  following  interim  re- 
ceipt will  be  found  convenient.  This  has  the  usual  stub — 
not  shown  in  the  form — and  may  be  signed  by  the  presi- 
dent as  well  as  the  treasurer  if  desired. 

Form  II. — Interim  Receipt. 


No.  75.  Shares,  5. 

Treasurer's  Receipt. 

HARVEY   STEEL  COMPANY. 

320  Broadway,  New  York. 


Capital    Stock $500,000. 

Shares.... $100  each. 


$500.00. 

This  is  to  Certify  that  John  G.  Wymond  has  paid  into  the  treasury 
of  the  Harvey  Steel  Company  the  sum  of  Five  Hundred  Dollars  in  full 
payment  for  Five  Shares  of  its  Common  Stock,  duly  executed  certificates 
for  which  will  be  issued  to  his  order  upon  surrender  of  this  receipt,  so 
soon  as  said  certificates  are  ready  for  delivery. 

Nathan  H.  Beebohn, 

Chicago,  111.,  August  15,  1908.  Treasurer. 


Temporary  certificates  of  stock  when  issued  are  in  the 
general  form  of  the  permanent  certificate  but  reference  is 
made  in  the  body  of  the  instrument  to  its  temporary  char- 
acter, and  the  certificate  itself  is  usually  printed  or  other- 
wise prepared  at  a  small  cost  in  keeping  with  its  temporary 
nature. 


25D 


FORMS  REI*ATING  TO  INCORPORATION. 


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SUBSCRIPTION  USTS  AND  REJCEIPTS.  231 

(c)     Assignment  of  Stock  Subscriptions. 

Subscriptions,  or  when  payments  have  been  made  the 
partly  paid  stock  represented  thereby,  may  be  assigned  in 
whole  or  in  part  as  may  any  other  contract  right  or  prop- 
erty, unless  otherwise  expressly  provided  by  the  statutes 
of  the  state  or  by  some  other  competent  authority.  If  no 
payments  have  been  made,  the  following  assignment  form 
may  be  used. 

Form  13. — Assignment  of  Subscription.     No  Payments. 

For  Value  Received,  I  hereby  sell,  assign  and  transfer  to  John  H.  Mc- 
Lane  of  New  York  City,  my  subscription  rights  to  Twenty-five  (25) 
Shares  of  the  Capital  Stock  of  the  Richmond  Paper  Mills  Company,  and 
I  do  hereby  authorize  and  instruct  the  proper  officers  of  said  Company 
upon  completion  of  the  conditions  of  my  said  subscription,  to  issue  said 
stock  to  the  order  of  my  said  assignee. 

Patrick  H.  McGuffy. 

New  York,  September  10,  1908. 

In  the  presence  of: 

Henry  H.  Sinci,air. 

If  payments  have  been  made  on  the  subscription  and 
are  evidenced  by  treasurer's  receipts  or  by  instalment 
scrip,  the  subscription  and  the  payments  thereon  might  be 
conveyed  by  one  blanket  assignment,  though  a  separate 
assignment  of  each  receipt  is  usually  preferable.  The 
form  of  blanket  assignment  is  as  follows : 

Form  14. — Assignment  of  Subscription.     Partly  Paid. 

For  Value  Received,  I  hereby  sell,  assign  and  transfer  to  William  M. 
Stanton  of  Philadelphia,  my  subscription  rights  to  Twenty-five  (25) 
Shares  of  the  Capital  Stock  of  the  Pacific  Coast  Development  Company 
together  with  the  payments  made  thereon  aggregating  Two  Thousand 
($2,000)  Dollars  and  evidenced  by  the  attached  instalment  certificates 
which  are  hereby  likewise  assigned  and  transferred  to  the  said  William 
M.  Stanton,  and  I  do  hereby  authorize  and  instruct  the  proper  officers  of 
said  Company  upon  completion  of  the  conditions  of  my  said  subscription, 
to  issue  said  stock  to  the  order  of  my  said  assignee. 

Max  M.  Werlein. 

Philadelphia,  Pa.,  November  10,  1908. 

In  the  presence  of: 

Jerry  H.  McCall. 


232  FORMS  RELATING  TO  INCORPORATION. 

When  the  subscription  rights  are  transferred  by  a 
formal  assignment,  a  very  simple  endorsement  will  suffice 
to  convey  the  receipts  by  which  payments  on  such  sub- 
scription are  evidenced. 

Form  15. — Assignment  of  Instalment  Receipt. 

For  Value  Received,  I  hereby  sell,  assign  and  transfer  to  William  M. 
Stanton  the  within  receipt  and  the  payments  evidenced  thereby. 

Max  M.  WerIvEin. 
Philadelphia,  Pa.,  November  10,  1908. 
In  the  presence  of: 

Jerry  H.  McCall. 


CHAPTER  XXIII. 
FORMS  OF  STOCK  CERTIFICATES. 


Stock  certificates  may  be  obtained  in  many  different 
styles  and  sizes.  The  lower-priced  certificates  are  usually 
prepared  in  quantity  with  lithographed  design  and  word- 
ing, complete  save  as  to  the  then  undetermined  data,  such 
as  the  company  name,  capital  stock,  date  of  issue,  name  of 
purchaser,  etc.,  for  which  blanks  are  left.  The  certificates 
thus  partially  prepared  are  supplied  to  the  local  printers 
who,  when  certificates  are  ordered  by  some  particular  cor- 
poration, print  in  the  name,  capitalization  and  other  fixed 
data,  leaving  blanks  for  the  variable  data  which  can  only  be 
filled  in  at  the  time  of  issue,  such  as  the  number  of  shares, 
name  of  purchaser  and  date  of  issue.  The  better  certifi- 
cates of  this  class  are  neat,  attractive  and  satisfactory. 

When  a  higher  grade  of  certificate  with  special  wording 
or  design  is  desired,  the  certificate  is  lithographed  or  en- 
graved throughout  and  a  fine  quality  of  bond  paper  is 
employed.  On  the  other  hand,  if  the  issue  is  but  tem- 
porary or  the  incorporators  indifferent,  the  certificates  are 
printed  in  the  plainest  design,  or  even  at  times  merely 
written  on  common  paper. 

Any  certificate  which  clearly  indicates  the  stock  it  rep- 
resents and  the  ownership  of  this  stock,  is  legally  sufficient 
regardless  of  its  form  and  style.  As  a  matter  of  business, 
however,  and  of  good  taste  as  well,  a  neat  and  presentable 
certificate  is  always  to  be  preferred. 

233 


234  FORMS  REI/ATING  TO  INCORPORATION. 

It  is  customary  for  two  of  the  company  officials  to  sign 
stock  certificates;  also  for  the  corporate  seal  to  be  affixed. 
The  officers  to  sign  stock  certificates  are  usually  desig- 
nated by  the  by-laws  of  the  corporation,  though  in  some 
states  they  are  prescribed  by  statute.  The  president  is  al- 
ways required  to  be  one  of  the  signing  officials,  and  the 
secretary  or  treasurer  is  designated  as  the  other.  When 
there  is  no  special  reason  for  the  selection  of  the  treasurer, 
the  second  signing  officer  is  preferably  the  secretary. 

The  words  "full-paid  and  non-assessable"  should  not 
appear  upon  the  face  of  a  stock  certificate  unless  the  cor- 
poration has  been  paid  in  full  for  the  stock  which  such 
certificate  represents.  (See  §  29.)  The  word  "Com- 
pany" is  usually  given  in  full  in  the  title  on  the  stock  cer- 
tificate, though  the  abbreviation  "Co."  may  be  used  if  pre- 
ferred. In  some  states  the  word  "Incorporated"  or  its 
abbreviation  "Inc."  must  appear  in  connection  with  the 
name. 

Stock  certificates  are  numbered  consecutively  and  are 
issued  in  the  order  of  their  numbers,  not  as  a  matter  of 
legal  obligation  but  merely  one  of  convenience.  When  the 
number  of  certificates  to  be  issued  is  very  large,  or  other 
reasons  make  it  desirable,  the  certificates  are  sometimes 
run  in  series.  Thus  the  first  certificate  of  the  first,  second 
and  third  thousand  might  be  numbered  respectively  "i," 
"Ai"and"Bi." 

In  the  small  or  "close"  corporations,  a  book  of  fifty  to 
one  hundred  stock  certificates  is  usually  amply  sufficient. 
In  the  larger  corporations,  or  smaller  corporations  where 
the  stock  is  active,  one  or  more  larger  books  are  usually 
prepared,  each  containing  five  hundred  or  one  thousand 
certificates.  For  very  active  stock  a  number  of  volumes 
are  frequently  required.  In  such  case  the  serial  numbers 
run  up  regularly  through  the  volumes,  as  i  to  500  in  the 
first  volume,  501  to  1,000  in  the  second,  and  so  on.     The 


STOCK   CERTIFICATES. 


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236 


FORMS  Ri;i,ATlNG  TO  INCORPORATION. 


binding  of  the  stock  certificate  book  should  be  durable,  as 
it  is  one  of  the  permanent  records  of  the  corporation. 

When  preferred  stock  is  issued  its  certificates  are  also 
numbered  from  "i"  up  and  are  usually  bound  in  a  separate 
volume.  If,  however,  only  a  few  certificates  are  required, 
they  are  sometimes  bound  up  with  the  certificates  of  com- 
mon stock  as  a  separate  division  of  the  book,  the  number- 
ing of  each  kind  of  certificate  being  entirely  separate  and 
distinct. 

The  certificate  and  stub  given  in  Form  i6  will  be  found 
legally  correct.  The  signatures  follow  the  requirements 
of  the  New  Jersey  statutes,  which  provide  that  stock  cer- 
tificates must  be  signed  by  the  president  and  treasurer. 
The  receipt  on  its  stub  is  signed  by  the  party  to  whom  the 
certificate  is  delivered,  who  may  or  may  not  be  the  party 
in  whose  name  it  is  issued.  (See  §  38.)  When  sent  to 
parties  at  a  distance,  certificates  should  either  be  sent  by 
registered  mail  or  by  express,  in  this  latter  case' accom- 
panied by  a  receipt  to  be  signed  before  the  certificate  is 
delivered.  In  either  case  the  receipt  which  is  returned  is 
pasted  to  the  proper  stub  in  the  stock  certificate  book. 

Form  17. — Stock  Certificate  Stub.     Common  Form. 


Certificate  No.   125 
For  20  Shares. 
Issued  to 

Howard   H.   McNeil, 
35  William  St., 
New  York. 
Dated,  September  10,  1908. 
From  Whom  Transferred, 

James   H.   Stanley. 
Dated,  January  1,  1908. 


NO.    ORIGINAI. 
CERTIFICATE. 


16 


NO.   ORIGINAL. 
SHARES. 


NO.    OF    SHARES 
TRANSFERRED. 


20 


20 


Received    Certificate    No.    125    for    20    Shares, 
this  12th  day  of  September,  1908. 

Howard  H.  McNeil. 


STOCK   CERTIFICATES.  237 

When  a  certificate  represents  an  original  issue,  on  its 
stub  under  the  heading  "Issued  against  surrendered  cer- 
tificate No "  should  be  entered  the  statement  "Orig- 
inal Issue." 

The  foregoing  somewhat  complicated  form  of  stub 
(Form  17)  is  given  merely  because  it  is  frequently  en- 
countered and  is  difficult  to  understand  and  use  without 
illustration.  The  data  of  this  stub  are  the  same  as  ap- 
pear on  the  preceding  certificate  and  stub  (Form  i6),  but 
in  addition  thereto  appears — somewhat  unnecessarily — 
the  name  of  the  transferrer,  the  date  of  issue  of  his  cer- 
tificate and  the  number  of  shares  it  represented. 

If  nothing  appears  on  the  face  of  a  stock  certificate  to 
the  contrary,  it  represents  common  stock.  If  the  com- 
pany issues  preferred  stock,  this  fact  should  be  shown  by 
both  the  common  and  preferred  stock  certificates  and  the 
kind  of  stock  represented  by  the  particular  certificate 
should  appear  unmistakably  on  its  face.  Usually  the 
term  "Common  Stock"  or  "Preferred  Stock,"  as  the  case 
may  be,  is  stamped,  printed  or  lithographed  prominently 
across  the  face  of  each  certificate. 

Form  18. — Preferred  Stock  Certificate. 


No.  35.  25  Shares. 

Incorporated  under  the  Laws  of 

The  State  of  New  York. 

HOWARD  BANK  NOTE  COMPANY. 


Capital    Stock $500,000. 

Common    Stock $400,000. 

Preferred  Stock.. .  .$100,000. 


Full-paid  and  Non-assessable. 

This  is  to  Certify  that  Henry  J.  McVeigh  is  the  owner  of  Twenty- 
five  Shares  of  the  Preferred  Capital  Stock  of  the  Howard  Bank  Note 
Company,  transferable  only  on  the  books  of  the  Company  by  the  said 
owner,  in  person  or  by  duly  authorized  attorney,  upon  surrender  of  this 
Certificate  properly  endorsed. 


238  FORMS  REI.ATING  TO  INCORPORATION. 

The  Preferred  Stock  represented  by  this  Certificate  is  entitled  to  an 
annual  cumulative  dividend  of  Five  (5%)  Per  Cent.,  payable  out  of  net 
profits  before  any  dividend  is  paid  upon  the  Common  Stock  of  the  Com- 
pany. Should  the  net  profits  in  any  year  be  insufficient  to  pay  said  pre- 
ferred dividend,  either  in  whole  or  in  part,  any  unpaid  portion  thereof 
shall  become  a  charge  against  the  net  profits  of  the  Company  and  shall 
be  paid  in  full  out  of  said  net  profits  before  any  dividends  are  paid  upon 
the  Common  Stock.  After  the  Common  Stock  in  any  year  shall  have 
also  received  a  dividend  of  Five  (5%)  Per  Cent,  both  the  Preferred  and 
Common  Stock  shall  participate  equally  in  any  further  dividends  that 
may  be  declared  in  that  year. 

On  liquidation  of  the  Company  said  Preferred  Stock  shall  receive  any 
unpaid  dividends  accrued  thereon  and  shall  receive  payment  of  its  full 
par  value  of  One  Hundred  ($100)  Dollars  per  share  from  the  assets 'of 
the  Company  before  anything  is  paid  therefrom  to  the  Common  Stock, 
but  shall  not  participate  further  in  the  distribution  of  said  assets. 

{CORPORATB   "I  Witness  the  Seal  of  the  Company  and  the  signatures 

SBAL.      J  of  its  duly  authorized  officers,   this  first  day  of 

October,  1908. 
Edwin  T.  Howard,  John  J.  Howard, 

President.  Secretary. 

Shares,  $100  Each. 


Preferred  stock  certificates  are  of  the  same  general 
form  as  certificates  for  common  stock  but  must  show  upon 
the  face  of  the  certificate  the  conditions  under  which  the 
preferred  stock  is  issued.  In  many  states  this  is  a  statute 
requirement.  In  some  few  states  the  conditions  of  pre- 
ferred stock  must  appear  upon  the  certificates  of  both  pre- 
ferred and  common  stock. 

The  stubs  of  preferred  stock  certificates  are  the  same 
in  form  as  those  of  common  stock  certificates.  Properly 
they  should  be  headed  "Preferred  Stock,"  but  the  require- 
ment is  usually  disregarded. 

When  the  conditions  of  preferred  stock  are  lengthy, 
their  full  statement  is  frequently  omitted  from  the  face  of 
the  certificate — if  the  statutes  of  the  particular  state  per- 
mit— and  reference  is  made  to  the  charter  or  by-law  pro^ 
vision  by  which  the  preferred  stock  is  created.  In  such 
case  the  second,  third  and  fourth  paragraphs  of  the  cer- 
tificate given  under  Form  i8  would  be  omitted  and  their 
place  be  taken  by  a  new  paragraph  stating: 

"Said  stock  is  part  of  an  issuQ  of  One  Hundred 


STOCK  ci;rtificate;s.  239 

Thousand  ($100,000)  Dollars  par  value  of  Preferred 
Stock  authorized  by  the  Certificate  of  Incorporation 
of  the  said  Company  as  filed  in  the  office  of  the  Sec- 
retary of  State  of  New  York  on  the  5th  day  of  Au- 
gust, 1908,  and  is  issued  under  the  terms  and  con- 
ditions therein  set  forth." 
Certificates  of  preferred  stock  are  sometimes  issued  in 
very  crude  form,  the  ordinary  certificate  being  used,  with 
the  statement  that  it  represents  preferred  stock  and  the 
conditions  "under  which  such  preferred  stock  is  issued,  or 
the  reference  to  the  authority  under  which  it  is  issued, 
printed  across  its  face  in  red  or  some  other  distinctive 
style. 

Transfers  of  Stock. 

Stock  is  transferred  by  assignment,  the  form  for  which 
is  printed  or  lithographed  upon  the  back  of  the  certificate. 
The  assignment  form  which  follows  is  almost  invariably 
employed,  and  while  informal  and  incomplete  in  some  re- 
spects, is  sufficient.  The  form  as  shown  is  in  the  partially 
completed  condition  known  as  an  assignment  in  blank. 
(See  §  38.) 

Form  19. — Assignment  of  Stock  Certificate.     In  Blank. 


For    Value    Received hereby    sell,    assign    and    transfer    unto 

Shares    of    the    Capital 

Stock   represented  by  the  within   Certificate,   and   do  hereby   irrevocably 

constitute  and  appoint my 

Attorney  to  transfer  the  said  stock  on   the  books   of  the  within-named 
Company,  with  full  power  of  substitution  in  the  premises. 

Ellis  K.  Doyle. 

Dated 190 

In  presence  of : 

Charles  T.  Estabrook. 


When  the  owner  of  a  certificate  assigned  in  blank 
wishes  to  become  the  owner  of  record  of  the  stock  it  repre- 
sents, he.  completes  the  assignment  by  the  insertion  of  his 


240  FORMS  lUeiyATING  TO  INCORPORATION. 

own  name  as  in  the  following  form.  He  may  or  may  not 
fill  in  the  name  of  his  attorney  at  his  discretion.  (See  § 
38.) 

Form  20. — Assignment  of  Stock  Certificate.     Complete. 


For  Value  Received,  I  hereby  sell,  assign  and  transfer  unto  Martin  T. 
Marshall,  of  New  York  City,  Twenty-five  (25)  Shares  of  the  Capital 
Stock  represented  by  the  within  Certificate,  and  do  hereby  irrevocably 
constitute  and  appoint  Chester  A.  Slater  my  Attorney  to  transfer  the  said 
stock  on  the  books  of  the  within-named  Company,  with  full  power  of  sub- 
stitution in  the  premises. 

Ellis  K.  DovLe. 

Dated,  October  1,  1908. 

In  presence  of: 

Charles  T.  Estabrook. 


When  assigned  certificates  are  surrendered  to  the  sec- 
retary of  the  corporation  for  cancellation,  it  frequently 
happens  that  an  immediate  transfer  and  reissue  is  impos- 
sible. In  such  case  the  secretary  should  give  a  receipt  for 
the  surrendered  certificates.  He  may  then  transfer  and 
reissue  them  at  his  convenience.  The  following  is  a  re- 
ceipt of  this  nature. 

Form  21. — Secretary's  Receipt  for  Stock  Certificates. 

CARROLL  MILLING  COMPANY. 

Received  from  Harvey  J.  McConnell  the  following  duly  assigned  cer- 
tificates for  transfer  and  reissue : 

NUMBER.  OWNER  OE  RECORD.  SHARES. 

245  John  A.  Brown 35 

595  Henry  Ackers  20 

235  John  H.  Carroll 100 

Howard  McMasters, 

Secretary. 


CHAPTER  XXIV. 
CHARTER   FORMS. 


The  charter  or  certificate  of  incorporation — the  terms 
are  legally  synonymous — is  the  instrument  which  brings 
the  corporation  into  existence  and  from  which  most  of  its 
powers  are  derived.  It  should  be  drawn  by  a  competent 
attorney  familiar  with  its  possibilities  and  capable  of  ad- 
justing these  to  the  needs  of  the  particular  corporation. 
(See  Ch.  II,  "The  Charter.") 

The  general  form  and  requisites  of  the  charter  are 
much  the  same  in  all  parts  of  the  Union  but  the  details 
differ  in  compliance  with  statutory  requirements  in  almost 
every  state.  (See  §  ii.)  The  charter  forms  which  fol- 
low illustrate  this  variation. 

The  charter  is  prepared  and  executed  in  duplicate  or 
triplicate.  One  of  these  copies  is  usually  filed  with  the 
state  authorities,  one  with  the  local  authorities,  and  one, 
as  a  matter  of  course,  is  retained  for  the  files  of  the  cor- 
poration. Usually  a  copy  certified  by  the  Secretary  of 
State  or  other  competent  authority,  is  preferred  for  the 
corporate  files.  Save  in  case  of  litigation,  however,  such 
certification  is  not  essential. 

The  forms  which  follow,  while  taken  from  charters  of 
existing  corporations,  are  included  here  merely  to  ex- 
emplify the  numerous  references  to  the  charter  in  the  pres- 
ent volume.  For  larger  or  more  complex  incorporations 
the  charter  is  usually  much  expanded  by  amplification  of 
its  purposes  and  by  inclusion  of  special  provisions. 

241 


242  FORMS  RELATING  TO  INCORPORATION. 

Form  22. — New  York  Charter. 


Certificate  of  Incorporation 

of  the 

MICROMETER  SCALE  COMPANY. 


We,  the  undersigned,  all  being  of  full  age  and  two-thirds  being  citi- 
zens of  the  United  States  and  one  of  us  a  resident  of  the  State  of  New 
York,  for  the  purpose  of  forming  a  corporation  under  the  Business  Cor- 
porations Law  of  the  State  of  New  York,  do  hereby  certify  and  set  forth : 

First. — The  name  of  said  corporation  shall  me 

"Micrometer  Scale  Company." 
Second. — The  purposes  for  which  said  corporation  is  to  be  formed  are 
as  follows : 

(1)  To  manufacture,  buy,  sell,  import,  export  and  generally 
deal  in  and  with  scales,  weighing  machines  and  mechanical  devices 
for  weighing,  measuring  and  recording  the  weight  and  measure- 
ment of  all  kinds  of  goods  and  merchandise. 

(2)  To  acquire  patent  rights  throughout  the  world  for  the  in- 
ventions of  Wilhelm  Simonsson,  as  far  as  they  relate  to  weighing 
and  measuring  mechanisms,  and  to  manufacture  under  the  same 
and  to  use,  sell,  lease  and  otherwise  dispose  of  the  mechanisms  so 
manufactured,  and  to  sell,  let  on  royalty,  grant  licenses  in  respect 
of,  and  otherwise  turn  to  account  and  profit  the  patent  rights  so 
acquired. 

(3)  To  apply  for,  obtain,  purchase  or  otherwise  acquire  and  to 
register,  hold,  own,  use,  operate,  sell,  assign  or  otherwise  dispose 
of  and  turn  to  account  and  profit,  any  and  all  trade-marks,  im- 
provements, inventions,  tools,  apparatus,  mechanisms  and  machin- 
ery, useful  or  necessary  in  the  operations  of  the  Company,  whether 
secured  under  letters  patent  of  the  United  States  or  of  any  foreign 
country,  or  held  or  secured  in  any  other  manner. 

(4)  To  take,  lease,  purchase,  hire  or  otherwise  acquire  and  to 
hold,  use,  sell,  lease,  exchange,  mortgage,  improve  and  develop  real 
estate,  real  property  and  any  interest  or  right  therein,  and  to  con- 
struct or  have  constructed,  houses,  buildings,  store-houses,  factories, 
works,  plants  and  structures  of  every  description,  and  to  buy,  sell, 
own,  use,  manage,  operate  and  lease  the  same  or  similar  structures. 

(5)  To  take,  lease,  hire,  purchase,  manufacture  or  otherwise 
acquire  and  own,  and  to  sell,  hire,  lease,  pledge,  mortgage  and 
otherwise  deal  in  and  with  all  kinds  of  goods,  wares,  chattels,  mer- 
chandise, and  other  personal  property,  excepting  gold  and  silver 
bullion,  foreign  coins  and  bills  of  exchange. 

(6)  To  conduct  any  other  business  permissible  under  the  Busi- 
ness Corporations  Law  of  the  State  of  New  Yark,  manufacturing 
or  otherwise,  which  may  be  carried  on  to  advantage  in  connection 
with  or  in  addition  to  the  specified  purposes  of  the  corporation. 

Third. — The  amount  of  capital  stock  of  said  corporation  shall  be  Five 
Hundred  Thousand   ($500,000)    Dollars. 

The  amount  of  capital  with  which  said  corporation  will  begin  busi- 
ness is  Five  Hundred  ($500)  Dollars. 

Fourth. — The  number  of  shares  of  which  said  capital  stock  is  to  con- 
sist shall  be  Five  Thousand  (5,000)  Shares  of  the  par  value  of  One  Hun- 
dred ($100)   Dollars  each. 


CHARTERS.  243 

Fifth. — The  principal  office  of  the  corporation  shall  be  in  the  Borough 
of  Manhattan  and  in  the  City,  County  and  State  of  New  York. 

Sixth. — The  duration  of  said  corporation  shall  be  perpetual. 

Seventh. — The  number  of  directors  of  said  corporation  shall  be  seven. 

Eighth. — The  names  and  post-office  addresses  of  the  directors  for  the 
first  year  as  as  follows: 

NAM£S.  ADDRESSES. 

Howard  Maxwell 510  West  176th  Street,  New  York  City. 

Howard  J.  McCall 270  Broadway,  New  York  City. 

Edward  Blashfield 30  Broad  Street,  New  York  City. 

James  H.  McLane 30  Broad  Street,  New  York  City. 

Howard  H.  Thomas Montclair,  New  Jersey. 

Lewis  H.  Glass Oyster  Bay,  L.  I.,  New  York. 

Leonard  H.  Matthews Hartford,  Connecticut. 

Ninth. — The  names  and  post-office  addresses  of  the  subscribers  to  this 
certificate  and  the  number  of  shares  which  each  agrees  to  take  in  said 
corporation,  are  as  follows : 

NAMES.  ADDRESSES.  SHARES. 

Howard  Maxwell 510  West  176th  Street,  New  York  City. ...     460 

Howard  J.  McCall 270   Broadway,   New   York  City 20 

Edward  Blashfield 30  Broad   Street,   New  York   City 20 

Tenth. — Pursuant  to  Section  40  of  the  Stock  Corporation  Law  as 
amended,  this  corporation  shall  have  power  to  purchase,  acquire,  hold  and 
dispose  of  the  stocks,  bonds  and  other  evidences  of  indebtedness  of  any 
corporation,  domestic  or  foreign,  and  issue  in  exchange  therefor  its  stock, 
bonds  or  other  obligations. 

Eleventh. — At  all  elections  of  directors  of  this  corporation,  each 
stockholder  shall  be  entitled  to  as  many  votes  as  shall  equal  the  number 
of  his  shares  of  stock,  multiplied  by  the  number  of  directors  to  be  elected, 
and  he  may  cast  all  of  such  votes  for  a  single  director  or  may  distribute 
them  among  the  number  to  be  voted  for,  or  any  two  or  more  of  them  as 
he  may  see  fit. 

In  Witness  WhErEoe,  we  have  made  and  signed  this  Certifi- 
cate in  triplicate,  this  27th  day  of  August,  in  the  year 
One  Thousand,  Nine  Hundred  and  Eight. 

Howard    Maxwell. 
Howard- J.  McCall. 
Edward  Blashfield. 
State  of  New  York,  \ 
County   of   New   York,  j'^'^-' 

Personally  appeared  before  me  this  27th  day  of  August,  1908,  Howard 
Maxwell,  Howard  J.  McCall  and  Edward  Blashfield,  to  me  personally 
known  to  be  the  persons  described  in  and  who  executed  the  foregoing 
certificate,  and  severally  acknowledged  that  they  executed  the  same  for 
the  purposes  therein  set  forth. 

Oscar   Jacobs, 
(■notarial  1  Notary  Public,  Suffolk  County,  N.  Y. 

\      seal.      J  Certificate  filed  in  New  York  County. 


The  essential  features  of  a  New  Jersey  charter  are  the 
same  as  for  a  New  York  charter,  but  the  form  is  varied 
by  the  requirements  of  the  state  statutes. 


244  FORMS  Ker^ATlNG  TO  INCORPORATION. 

Form  23. — New  Jersey  Charter. 

Certificate  of  Incorporation 

of  the 
STERLING  ICE  COMPANY. 


We,  the  undersigned,  for  the  purpose  of  forming  a  corporation  under 
and  by  virtue  of  the  provisions  of  an  Act  of  the  Legislature  of  the  State 
of  New  Jersey,  entitled  "An  Act  Concerning  Corporations  (Revision  of 
1896),"  and  the  several  supplements  thereto  and  acts  amendatory  thereof, 
do  hereby  severally  subscribe  for  and  agree  to  take  the  number  of  shares 
of  stock  of  said  corporation  hereinafter  placed  opposite  our  respective 
names  and  do  certify  and  set  forth  as  follows : 

First. — The  name  of  said  corporation  shall  be 

"Sterwng  Ice  Company." 
Second. — The  location  of  its  principal  office  in  the  State  of  New  Jer- 
sey shall  be  at  No.  275  Montgomery  Street,  Jersey  City.     The  name  of  the 
agent  who   shall  be  therein   and   in   charge   thereof  upon  whom  process 
against  this  corporation  shall  be  served,  is  John  H.  Welch. 

Third. — The  objects  for  which  this  corporation  is  formed  are: 

(Purposes.) 
Fourth. — The  total  authorized  stock  of  the  corporation  shall  be  Two 
Hundred  and  Fifty  Thousand  ($250,000)  Dollars,  divided  into  Two 
Thousand,  Five  Hundred  (2,500)  Shares  of  the  par  value  of  One  Hun- 
dred ($100)  Dollars  each,  and  the  amount  of  Capital  Stock  with  which 
said  corporation  will  begin  business  is  One  Thousand  ($1,000)  Dollars. 
Of  said  Capital  Stock  One  Thousand,  Five  Hundred  (1,500)  Shares  shall 
be  Common  Stock  and  One  Thousand  (1,000)  Shares  shall  be  Preferred 
Stock. 

Such  Preferred  Stock  shall  after  January  1st,  1909,  be  entitled 
to  a  preferential,  cumulative,  annual  dividend  of  Six  (6%)  Per  Cent., 
payable  on  or  before  the  31st  day  of  December  of  each  year  from  the 
surplus  profits  of  the  Company,  and  after  the  Common  Stock  of  the  Com- 
pany shall  have  received  a  like  dividend,  shall  participate  with  the  Com- 
mon Stock  in  all  further  dividends  declared  in  that  year  above  Six  (6%) 
Per  Cent,  and  up  to  but  not  exceeding  Twelve  (12%)  Per  Cent,  but  no 
further. 

Fifth. — The  names  and  post-office  addresses  of  the  incorporators  and 
the  number  of  shares  subscribed  for  by  each,  are  as  follows : 

names.  addresses.  shares. 

Harry  H.  Sterling  .\  .  .275  Montgomery  St.,  Jersey  City,  N.  J...        5 

Edward  Penfold "  "  "  "  "  "...        3 

Oscar  McComb "  "  "  "  "  "...        2 

James  Hamilton "  "  "  "  "  "...        2 

Sixth. — The  period  of  existence  of  said  corporation  shall  be  unlimited. 
In  Witness  Whereof,  we  have  hereunto  set  our  hands  and 
seals   this    31st   day   of   August,    A.    D.,    One    Thousand, 
Nine  Hundred  and  Eight. 

Harry    H.    Sterling.     (L.  S.) 

In  the  presence  of:  Edward   Penfold.  (L.  S.) 

Howard  Masterson.  Oscar  McComb.  (L.  S.) 

Robert  Benjamin.  James  Hamilton.  (L.  S.) 

(Acknowledgment. ) 


CHAPTER  XXV. 
BY-LAW   FORMS. 


As  the  general  corporate  mechanism  is  much  the  same 
in  all  corporations,  there  is  a  general  resemblance  between 
their  by-laws.  The  details  of  these  by-laws  should,  how- 
ever, in  each  case  be  adapted  to  the  special  requirements 
of  the  corporation  for  which  they  are  prepared.  (See  Ch. 
Ill,  "The  By-Laws.") 

The  set  of  by-laws  which  follows,  though  more  par- 
ticularly intended  to  illustrate  the  many  references  of  the 
present  volume  to  the  by-laws,  has  been  proved  by  long 
experience  and  will  afford  very  excellent  material  from 
which  to  construct  the  by-laws  of  any  particular  corpora- 
tion.^ The  set,  though  concise,  is  perhaps  more  complete 
than  is  entirely  necessary  for  the  smaller  corporations.  It 
is,  however,  far  better  for  by-laws — if  properly  adapted  to 
the  needs  of  the  particular  corporation — to  err  on  the  side 
of  completeness  than  of  insufficiency. 

Certain  features  of  the  by-laws  given  are  required  by 
the  New  York  statutes.  These  features  have  for  the  most 
part  been  indicated  and  must  be  omitted  or  modified  to 
meet  the  varying  statutory  provisions  when  the  by-laws 
are  used  in  other  states. 

As  a  matter  of  convenience,  by-laws  are  usually  re- 
corded in  the  first  part  of  the  minute  book  immediately 
following  a  similarly  recorded  copy  of  the  charter.  (See 
Ch.  XXIV.) 

*  More    extended    sets    of    by-laws    suitable    for    the    larger    corporations    may    be 
found  in  the  author's  work,  "Corporate  Organization,"  pages  310-330. 

245 


246  FORMS  REI/ATING  TO  INCORPORATION. 

Form  24. — By-Laws. 


By-Laws 

of  the 

NEW  YORK  CONSTRUCTION  COMPANY. 


AktiOvE  I.— Stock.* 

1.  Certificates  of  Stock  shall  be  in  form  approved  by  the  Board  of 
Directors;  shall  be  numbered  consecutively;  be  issued  in  numerical  order 
from  the  stock  certificate  book;  be  signed  by  the  President  and  Secre- 
tary, and  be  sealed  with  the  corporate  seal.  A  record  of  each  certificate 
issued  shall  be  kept  on  the  stub  thereof. 

2.  Transfers  of  Stock  shall  be  made  only  upon  the  books  of  the 
Company,  and  before  a  new  certificate  is  issued,  the  old  certificate  properly 
endorsed  shall  be  surrendered.  Surrendered  certificates  shall  be  can- 
celled and  be  attached  to  their  proper  stubs  in  the  stock  certificate  book. 
The  stock  books  of  the  Company  shall  be  closed  to  transfers  twenty  days 
before  general  elections  and  ten  days  before  dividend  days. 

3.  The  Treasury  Stock  of  the  Company  shall  include  such  issued  and 
outstanding  stock  of  the  Company  as  may  be  acquired  by  purchase,  dona- 
tion or  otherwise  and  shall  be  held  subject  to  disposal  by  the  Board  of 
Directors.  Such  stock  shall  neither  vote  nor  participate  in  dividends 
while  held  by  the  Company. 

Article  II. — Stockholders. 

1.  The  Annual  Meeting  of  the  stockholders  of  the  Company  shall 
be  held  in  the  principal  office  of  the  Company  in  New  York  City  at  10 
o'clock  A.  M.  on  the  3rd  Monday  of  January  of  each  year — if  not  a  legal 
holiday;  but  if  a  legal  holiday,  then  on  the  next  business  day  succeeding 
— for  the  purpose  of  electing  directors  and  the  transaction  of  such  other 
business  as  may  be  brought  before  the  meeting. 

2.  Special  Meetings  of  the  stockholders  shall  be  held  at  the  principal 
office  of  the  Company  and  may  be  called  by  the  President  at  his  discretion 
and  must  be  called  by  him  when  so  directed  by  resolution  of  the  Board  of 
Directors,  or  when  requested  thereto  in  writing  by  stockholders  holding 
one-third  of  the  outstanding  stock. 

3.  Notice  of  Meetings,  written  or  printed,  for  every  annual  or  special 
meeting  of  the  stockholders  shall  be  prepared  and  mailed  to  the  post- 
office  address  of  each  stockholder  as  shown  by  the  stock  books  of  the 
Company  not  less  than  ten  days  before  such  meeting,  and  if  for  a  special 
meeting  such  notice  shall  state  the  object  or  objects  thereof,  and  no  other 
business  shall  be  transacted  at  any  such  special  meetings  save  that  so 
notified.'     No  notice  need  be  given  of  adjourned  meetings. 

4.  A  Quorum  at  any  meeting  of  the  stockholders,  save  as  otherwise 
prescribed  by  statute,*  shall  consist  of  a  majority  of  the  voting  stock  of 
the  Company  represented  in  person  or  by  written  proxy.  A  majority  of 
such  quorum  shall  be  necessary  to  decide  any  question  coming  before 
the  meeting.  If  a  quorum  is  not  present  at  any  duly  called  meeting,  a 
majority  of  those  present  may  adjourn  the  meeting  from  day  to  day,  but 
until  a  quorum  is  secured  may  transact  no  business. 

5.  Voting  at  Elections  of  Directors  shall  be  by  ballot,  and  shall  also 
be  by  ballot  on  any  other  matter  submitted  to  a   stockholders'  meeting 

*  If  preferred  stock  is  created  by  by-law  provision,  the  s^tion  devoted  to.  i% 
should  appear  under  Article  I. 


BY-i^ws.  247 

when  so  requested  by  not  less  than  one-fourth  in  interest  of  the  stock- 
holders present  at  such  meeting.  Each  stockholder  shall  be  entitled  to 
one  vote  for  each  share  of  stock  held  by  him  and  such  vote  may  be  cast  in 
person  or  by  written  proxy. 

6.  The  Election  of  Directors  shall  be  held  at  the  annual  meeting  of 
stockholders  and  shall  be  conducted  by  two  inspectors  of  election  ap- 
pointed, after  the  first  election,  by  the  President.' 

7.  The  Presiding  Officer  at  meetings  of  stockholders  shall  be  the 
President,  or  in  his  absence  or  disability,  the  Vice-President.  In  the  ab- 
sence or  disability  of  both  of  these  officers,  a  Chairman  shall  be  chosen 
by  the  stockholders  present  and  shall  preside  at  such  meeting.  In  the 
absence  of  the  Secretary  of  the  Company,  the  presiding  officer  shall  ap- 
point a  Secretary  pro  tern. 

8.  The  Order  of  Business  at  the  annual  meeting  and  as  far  as  possi- 
ble at  all  other  meetings  of  the  stockholders,  shall  be: 

1.  Reading  and  Disposal  of  Any  Unapproved  Minutes. 

2.  Annual  Reports  of  Officers  and  Committees. 

3.  Election  of  Directors. 

4.  Unfinished  Business. 

5.  New  Business. 

6.  Adjournment. 

Article  III. — Directors. 

1.  The  Business  and  Property  of  the  Company  shall  be  managed  by 
a  Board  of  Seven  (7)  Directors,  who  shall  be  stockholders  continuously 
during  their  respective  terms  of  office  and  who  shall  be  elected  annually 
by  ballot  by  the  stockholders  for  the  term  of  one  year  and  shall  serve 
until  the  election  of  their  successors.  Any  vacancies  in  the  Board  may  be 
filled  by  the  remaining  members  of  the  Board  for  the  unexpired  term  or 
terms.  Directors  shall  receive  no  compensation  for  their  services.  Ab- 
sence from  four  successive  regular  meetings  of  the  Board  of  Directors 
may,  in  the  discretion  of  the  Board,  terminate  the  membership  of  the  ab- 
sent director. 

2.  The  Regular  Meetings  of  the  Board  of  Directors  shall  be  held  in 
the  principal  office  of  the  Company  in  New  York  City  at  3  P.  M.  on  the 
third  Tuesday  of  each  month  if  not  a  legal  holiday;  but  if  a  legal  holi- 
day, then  on  the  next  succeeding  business  day. 

3.  Special  Meetings  of  the  Board  of  Directors,  to  be  held  in  the 
principal  office  of  the  Company  in  New  York  City,  may  be  called  at  any 
time  by  the  President  or  by  any  three  members  of  the  Board,  or  may  be 
held  at  any  time  and  place  without  notice  and  for  the  transaction  of  any 
business  by  unanimous  written  consent  of  all  the  members  or  by  the 
presence  of  all  the  members  at  such  meeting. 

4.  Notices  of  both  regular  and  special  meetings*  shall  be  mailed  by 
the  Secretary  to  each  member  of  the  Board  not  less  than  five  days  be- 
fore any  such  meeting,  and  notices  of  special  meetings  shall  state  the 
purpose  thereof,  and  no  other  business  shall  be  transacted  at  a  special 
meeting  save  as  so  notified  unless  by  unanimous  consent  of  all  the  mem- 
bers.    No  notice  need  be  given  of  adjourned  meetings. 

•  It  is  sometimes  provided  that  no  failure  or  irregularity  of  notice  shall  invalidate 
the  annual  meeting  or  any  proceedings  thereat.  In  New  York  annual  meetings  re- 
quire two  weeks'  notice  by  publication;  also  the  notice  to  be  given  for  certain  special 
meetings,  such  as  to  mortgage  corporate  property,  to  create  preferred  stock,  etc.,  is 
prescribed   by  statute. 

•  Special  quorums  are  prescribed  in  many  states  for  special  actions,  as  amend- 
ment of  charter,  etc.  In  New  York  the  statutes  provide  that  at  meetings  for  election 
of  directors  the  stockholders  present  constitute  a  quorum  without  regard  to  their 
number. 

•  Inspectors  for  first  meeting  are  in  New  York  appointed  by  the  board  of  direc- 
ton. 


248  FORMS  REI.ATING  TO  INCORPORATION. 

5.  A  Quorum  at  any  meeting  shall  consist  of  a  majority  of  the  en- 
tire membership  of  the  Board.  A  majority  of  such  quorum  shall  be  nec- 
essary to  decide  any  question  that  may  come  before  the  meeting.  If  a 
quorum  is  not  present  at  any  duly  assembled  meeting,  a  majority  of  those 
present  rnay  adjourn  the  meeting  from  day  to  day  but  may  transact  no 
other  business  until  a  quorum  is  secured. 

6.  Voting.  Each  member  of  the  Board  present  in  person  at  any 
meeting  shall  have  one  vote  upon  all  matters  voted  upon  at  such  meeting. 

7.  The  Presiding  Officer  at  meetings  of  the  Directors  shall  be  the 
President,  or  in  his  absence  or  disability,  the  Vice-President.  In  the  ab- 
sence or  disability  of  both  these  officers,  the  directors  present  at  any 
meeting  shall  appoint  a  chairman  who  shall  preside  at  such  meeting.  In 
the  absence  of  the  Secretary  of  the  Company,  the  presiding  officer  shall 
appoint  a  Secretary  pro  tern. 

8.  Officers  of  the  Company  shall  be  elected  by  the  Board  of  Directors 
at  their  first  meeting  after  the  election  of  Directors  each  year.  If  any 
office  becomes  vacant  during  the  year,  the  Board  of  Directors  shall  fill 
the  same  for  the  unexpired  term.  The  Board  of  Directors  shall  fix  the 
compensation  of  the  officers  and  agents  of  the  Company.  An  officer  may 
be  removed  at  any  time  by  a  two-thirds  vote  of  the  entire  membership 
of  the  Board. 

9.  The  Order  of  Business  at  any  regular  meeting  or  special  meet- 
ing of  the  Board  of  Directors  shall  be : 

1.  Reading  and  Disposal  of  Any  Unapproved  Minutes. 

2.  Reports  of  Officers  and  Committees. 

3.  Unfinished  Business. 

4.  New  Business. 

5.  Adjournment. 

Article  IV. — Officers. 

1.  The  Officers  of  the  Company  shall  be  a  President,  who  shall  be 
elected  from  among  the  directors,  a  Vice-President,  a  Secretary  and  a 
Treasurer,  all  of  whom  shall  be  elected  for  one  year  and  shall  hold  office 
until  their  successors  are  elected  and  qualify.  The  positions  of  Secre- 
tary and  Treasurer  may  be  united  in  one  person. 

2.  The  President  shall  preside  at  meetings  of  stockholders  and  of 
directors;  shall  have  general  supervision  of  the  affairs  of  the  Company; 
shall  sign  or  countersign  all  certificates,  contracts  and  other  instruments 
of  the  Company  as  authorized  by  the  Board  of  Directors ;  shall  make  re- 
ports to  the  directors  and  stockholders,  and  perform  all  such  other  duties 
as  are  incident  to  his  office  or  are  properly  required  of  him  by  the  Board 
of  Directors.  In  the  absence  or  disability  of  the  President,  the  Vice- 
President  shall  exercise  all  his  functions. 

3.  The  Secretary  shall  issue  notices  for  all  meetings  of  both  stock- 
holders and  directors;  shall  keep  their  minutes;  shall  have  charge  of  the 
seal  and  the  corporate  stock  books;  shall  sign  with  the  President  all  in- 
struments requiring  such  signature,  and  shall  make  such  reports  and 
perform  such  other  duties  as  are  incident  to  his  office  or  are  properly 
required  of  him  by  the  Board  of  Directors. 

4.  The  Treasurer  shall  have  the  custody  of  all  moneys  and  securi- 
ties of  the  Company  and  shall  keep  regular  books  of  account  and  balance 
the  same  each  month.  He  shall  sign  or  countersign  such  instruments  as 
require  his  signature ;  shall  perform  all  duties  incident  to  his  office  or  that 
are  properly  required  of  him  by  the  Board,  and  shall  give  bond  for  the 
faithful  performance  of  his  duties  in  such  sum  and  with  such  sureties 
as  may  be  required  by  the  Board  of  Directors. 

•It  is  sometimes  provided  that  no  notice  shall  be  given   of  regular  meeting  of 
directors.     For  the  ordinary  corporation  such  a  provision  is  hardly  advisable. 


BY-I^AWS.  249 

Article  V. — Dividends  and  Finance. 

1.  Dividends  shall  be  declared  only  from  surplus  profits  at  such  times 
as  the  Board  of  Directors  shall  direct,  and  no  dividend  shall  be  declared 
that  will  impair  the  capital  of  the  Company. 

2.  The  Moneys  of  the  Company  shall  be  deposited  in  the  name  of 
the  Company  in  such  bank  or  trust  company  as  the  Board  of  Directors 
shall  designate,  and  shall  be  drawn  out  only  by  check  signed  by  the 
Treasurer  and  countersigned  by  the  President. 

Article  VI.— Seal. 
1.  The  Corporate  Seal  of  the  Company  shall  consist  of  two  con- 
centric circles,  between  which  appears  the  name  of  the  Company,  and  in 
the  centre  shall  be  inscribed  "Incorporated  1908,  New  York,"  and  such 
seal,  as  impressed  on  the  margin  hereof,  is  hereby  adopted  as  the  Cor- 
porate Seal  of  the  Company. 

Article  VII. — Amendments. 

1.  These  By-Laws  may  be  amended,  repealed  or  altered,  in  whole  or 
in  part,  by  a  majority  vote  of  the  entire  outstanding  stock  of  the  Com- 
pany, at  any  regular  meeting  of  the  stockholders,  or  at  any  special  meeting 
where  such  action  has  been  announced  in  the  call  and  notice  of  such 
meeting. 

2.  The  Board  of  Directors  may  adopt  additional  by-laws  in  har- 
mony therewith,  but  shall  not  alter  nor  repeal  any  by-laws  adopted  by 
the  stockholders  of  the  Company. 


Certification  of  the  by-laws  as  they  appear  in  the  min- 
ute book,  though  usual,  is  not  essential.  Such  certifica- 
tion when  desired  should  immediately  follow  the  by-laws 
and  be  in  the  following  general  form. 

Form  25. — Certification  of  By-Laws. 


We,  the  undersigned,  President  and  Secretary  of  the  New  York  Con- 
struction Company,  do  hereby  certify  that  the  foregoing  are  the  By-laws  of 
the  said  corporation  duly  adopted  by  the  stockholders  thereof,  at  their  first 
meeting  held  in  the  City  of  New  York,  on  the  10th  day  of  October,  1908, 
all  as  shown  by  the  Minutes  of  said  meeting. 

In  Witness  Whereof,  we  have  hereunto  affixed  our  official 
signatures  and  the  corporate  seal  of  said  corporation   on 
this  15th  day  of  October,  1908. 
f  corporate  \  James  T.  HoldEn,  President. 

\       seal,      j  Everett  A.  Barrett,  Secretary. 


CHAPTER  XXVI. 
EXCHANGE  OF  PROPERTY  FOR  STOCK. 


When  a  corporation  is  organized  to  take  over  prop- 
erty, giving  its  stock  in  exchange,  the  matter  is  conven- 
iently brought  up  for  consideration  by  means  of  a  formal 
proposition  addressed  to  the  company  by  the  owner  of  the 
property.  Sometimes,  instead,  a  proposed  form  of  agree- 
ment between  the  owner  of  the  property  and  the  corpora- 
tion covering  the  details  of  the  exchange  is  submitted  for 
consideration  and  action. 

In  either  case  the  matter  is  usually  presented  to  and 
approved  by  the  stockholders  at  their  first  meeting.  Final 
action  is  then  taken  by  the  board  of  directors.  The  di- 
rectors have  power  to  act  without  previous  authorization 
by  the  stockholders,  but  as  the  matter  is  an  important  one, 
a  stockholders'  authorization,  by  which  they  are  estopped 
from  any  future  objections,  is  considered  a  desirable  pre- 
liminary to  the  directors'  acceptance. 

The  usual  form  of  proposition  for  exchange  of  prop- 
erty for  stock  involves  the  issue  of  the  entire  stock  of  the 
company  in  payment  for  the  property  offered.  This  is 
usually  desired  but,  as  a  certain  portion  of  the  stock  has 
already  been  subscribed  for  by  the  incorporators,  either 
the  subscribed  stock  must  be  excluded  or  some  adjust- 
ment of  the  incorporators'  subscriptions  must  be  made. 

A  simple  method  of  arranging  the  matter  is  for  the 
owner  of  the  property  to  make  some  mutually  satisfactory 
arrangement  with  the  incorporators  for  the  payment  by 
him  of  their  subscriptions.     (See  Form  26.)     This  is  en- 

250 


EXCHANGK  OF  PROPERTY  FOR  STOCK.  251 

tirely  legitimate  so  far  as  the  corporation  is  concerned,  as 
it  is  a  matter  of  indifference  to  the  company  whether  sub- 
scriptions are  paid  by  the  subscribers  themselves  or  by 
someone  else  for  them. 

Another  method  is  for  the  incorporators  to  formally 
assign  their  subscriptions  to  the  person  making  the  prop- 
osition. (See  Form  2.^.^  In  such  event,  it  must  be  re- 
membered that  as  soon  as  the  assignment  becomes  effec- 
tive, the  incorporators  are  no  longer  stockholders  of  the 
company  and  cannot  act  as  such  unless  some  other  ar- 
rangement is  made  for  their  qualification. 

In  view^  of  recent  decisions  and  dicta  it  is  not  advis- 
able to  incorporate  in  the  proposition  any  agreement  for 
donation  of  stock  to  the  treasury  of  the  company.^ 

Form  26. — Proposition  to  Exchange  Property  for  Stock. 

Sterling  Ice  Company, 

275  Montgomery  Street, 
Jersey  City,  N.  J. 
Gentlemen  : — 

I  hereby  oflfer  your  Company  in  exchange  and  full  payment  for  its 
entire  capital  stock — including  by  agreement  of  the  incorporators  the 
shares  subscribed  by  them — ^the  entire  rights  and  letters  patent,  domestic 
and  foreign,  for  all  my  inventions  pertaining  to  (1)  the  manufacture  of 
ice,  (2)  refrigeration,  and  (3)  mechanisms  and  processes  to  be  used  in 
connection  therewith. 

In  event  of  your  acceptance  of  this  offer,  I  will  at  once  assign  to  the 
Company  all  United  States  rights,  letters  patent  and  applications  therefor, 
and  all  foreign  rights  for  my  said  inventions,  and  will  from  time  to  time 
execute  all  such  further  instruments  as  may  be  necessary  or  desirable  to 
vest  fully  in  your  Company  the  ownership  of  my  said  inventions. 

I  will  also  assign  to  your  Company  any  further  inventions  relating 
to  the  manufacture  of  ice,  or  to  refrigeration,  or  to  mechanisms  and 
processes  to  be  used  in  connection  therewith,  which  may  be  made  by  me 
within  five  years  from  the  date  of  your  acceptance  of  this  proposition, 
either  assigning  the  rights  before  patent  applications  are  made  therefor, 
or  assigning  the  patents  after  issue  of  the  same.  I  will  also  turn  over  to 
the  Company  all  models,  drawings  and  data  pertaining  to  my  said  inven- 
tions. 

It  is  a  condition  of  this  proposition  that  the  Company  shall  refund 
to  me  my  actual  expenditures  to  date  for  models,  drawings  and  letters 
patent,  as  per  statement  and  vouchers  to  be  submitted  on  demand,  said 
expenditures  amounting  in  all  to  the  sum  of  $5,245.43. 

If  this  offer  is  accepted,  the  stock  subscribed  for  by  Messrs.  Harry 
H,  Sterling,  Edward  Penfold,  Oscar  McComb  and  James  Hamilton  is  to 

» See  V.  Heppenheimer,  69  N.  J.  Eq.  36  (1905);  Knickerbocker,  etc.  Co.  ▼. 
Assessors,  74  N.  X  L.  583  (1907). 


252  FORMS  REI^ATING  TO  INCORPORATION. 

be  issued  to  them  or  their  order;  the  balance  of  the  stock  of  the  Com- 
pany to  my  order;  all  said  stock  to  be  issued  full-paid  and  non-assessable. 
Yours    very   truly, 

Edward  Dumont. 
New  York,  September  2nd,  1908. 

(See  Forms  37,  38.) 

If  an  assignment  of  the  incorporators'  subscription  is 
deemed  preferable,  the  following  form  may  be  used. 


Form  27. — Assignment  of  Incorporators'  Subscriptions. 


We,  the  undersigned,  being  all  the  incorporators  of  the  Leroy  Man- 
ufacturing Company,  in  consideration  of  the  sum  of  One  Dollar  to  each 
of  us  in  hand  paid,  the  receipt  whereof  is  hereby  acknowledged,  and  for 
other  good  and  valuable  considerations,  do  hereby  sell,  assign  and  make 
over  unto  Albert  H.  Hardin  the  stock  of  the  Leroy  Manufacturing  Com- 
pany respectively  subscribed  for  by  us,  and  do  hereby  authorize  and  in- 
struct the  officers  of  said  Company  to  issue  said  stock  to  the  order  of 
said  Albert  H.  Flardin  upon  completion  of  the  terms  of  our  subscriptions. 
This  assignment  is  conditioned  upon  the  acceptance  by  said  Leroy 
Manufacturing  Company  of  said  Hardin's  proposition  of  this  date  to  ex- 
change property  for  the  entire  capital  stock  of  said  Company,  and  after 
said  acceptance  is  not  to  be  effective  until  in  pursuance  thereof  the  said 
Hardin  has  made  due  and  formal  tender  of  payment  for  said  capital  stock 
according  to  the  terms  of  his  said  proposition. 

Witness  our  hands  and  seals  this  10th  day  of  September,  1908. 

WiLUAM    McCall.         (L.  S.) 
Frank  H.  Flynn.  (L.  S.) 

Robert   H.   Sterling.    (L.  S.) 
In  the  presence  of 

Howard  H.  Flint. 


This  assignment  when  employed  is  usually  either  writ- 
ten on  the  same  sheet  or  sheets  as  the  proposition  for  ex- 
change of  property  for  stock,  or  otherwise  is  attached 
thereto.  Under  its  conditions  the  incorporators  cannot 
lose  their  qualifying  stock  until  after  the  first  meetings. 

The  following  stockholders'  resolution  approving  the 
exchange  of  property  for  stock  is  in  pursuance  of  the 
proposition  of  Form  26. 


EXCHANGE  OE  PROPERTY  EOR  STOCK.  253 

Form  28. — Stockholders'  Resolution.     Property  for  Stock. 


Whereas,  A  proposition  has  been  received  from  Edward  Dumont 
oflfering  to  sell,  assign  and  convey  to  this  Company  certain  rights  and 
letters  patent,  domestic  and  foreign,  for  his  inventions  pertaining  to  the 
manufacture  of  ice,  to  refrigeration,  and  to  mechanisms  and  processes  to 
be  used  in  connection  therewith,  in  exchange  for  the  entire  capital  stock 
of  the  Company,  to  be  issued  full-paid  and  non-assessable  to  the  order  of 
the  said  Edward  Dumont,  all  as  set  forth  in  said  proposition ;  and 

Whereas,  It  appears  to  the  stockholders  of  this  Company  that  the 
said  inventions  are  desirable  for  the  purposes  of  the  Company  and  are 
reasonably  worth  the  stated  purchase  price  thereof: 

Now,  Therefore,  Be  It  Resolved,  That  the  exchange  of  said  rights, 
patents  and  inventions  for  the  entire  capital  stock  of  this  Company,  on 
the  terms  and  conditions  set  forth  in  said  proposition,  be  and  hereby  is 
approved,  and  the  Board  of  Directors  of  this  Company  are  hereby  au- 
thorized, empowered  and  instructed  to  accept  the  said  proposition,  to  re- 
ceive the  rights  and  patents  offered  therein,  and  to  cause  the  entire  capital 
stock  of  the  company  to  be  issued  in  payment  therefor. 


(See    Stockholders'   Minutes,    Form   37.) 

After  approval  by  the  stockholders,  the  proposition  is 
submitted  to  the  board  of  directors,  usually  accompanied 
by  a  copy  of  the  stockholders'  resolution,  and  the  board 
in  its  turn  adopts  a  resolution  of  acceptance. 

Form  29. — Directors'  Resolution.     Property  for  Stock. 


Whereas,  Certain  letters  patent  and  certain  rights,  domestic  and 
foreign,  for  the  inventions  of  Edward  Dumont  pertaining  to  the  manufac- 
ture of  ice  and  to  refrigeration,  and  to  mechanisms  and  processes  to  be 
used  in  connection  therewith,  are  offered  to  this  Company  in  exchange  for 
its  entire  capital  stock  as  set  forth  in  a  proposition  made  by  the  said 
Edward  Dumont  to  this  Company  under  date  of  September  2nd,  1908;  and 

Whereas,  The  exchange  of  said  letters  patent  and  rights  for  the  stock 
of  the  Company  as  contemplated  by  said  proposition,  has  been  approved 
by  the  stockholders  of  this  Company ;  and 

Whereas,  The  letters  patent  and  rights  so  offered  are  adjudged  by 
this  Board  to  be  of  the  reasonable  value  of  Two  Hundred  and  Fifty 
Thousand  ($250,000)  Dollars  and  to  be  necessary  for  the  use  and  lawful 
purposes  of  this  Company : 

Now,  Therefore,  Be  It  Resolved,  That  said  proposition  be  and  hereby 
is  accepted  in  accordance  with  its  terms,  and  that  said  letters  patent  and 
rights  for  the  inventions  of  Edward  Dumont  be  received  in  full  payment 
for  the  entire  capital  stock  of  this  Company,  and  that  the  President  and 
Treasurer  of  this  Company  be  and  hereby  are  authorized  and  directed  to 
receive  such  duly  executed  assignments  from  the  said  Edward  Dumont  as 


254  FORMS  RELATING  TO  INCORPORATION. 

may  be  necessary  to  carry  into  effect  the  terms  of  said  proposition  and  to 
convey  to  and  vest  in  this  Company  the  entire  right  and  title  in  and  to 
said  inventions,  and  to  issue  in  exchange  therefor  the  entire  capital  stock 
of  this  Company,  full-paid  and  non-assessable,  to  the  persons  designated 
in  said  proposition,  and  the  said  officers  of  the  Company  are  further  em- 
powered and  instructed  to  do  all  other  things  necessary  and  desirable  to 
consummate  the  exchange  of  the  said  letters  patent  and  rights  for  the  stock 
of  this  Company  and  to  carry  into  effect  the  terms  of  said  proposition ; 

Provided,  However,  That  the  acceptance  of  the  proposition  of  said 
Edward  Dumont  as  herein  set  forth,  shall  be  and  is  conditioned  upon  his 
further  granting  this  Company  licenses  to  use  any  other  inventions  already 
made  by  him  or  that  may  be  made  by  him  within  the  period  of  five  years 
from  this  present  acceptance,  in  so  far  as  said  inventions  are  applicable 
to  or  may  be  used  in  connection  with  the  manufacture  of  ice  or  with  re- 
frigeration, or  with  mechanisms  or  processes  to  be  used  in  connection 
therewith. 

(See  Directors'  Minutes,  Form  38.) 

The  assignment  executed  in  pursuance  of  the  forego- 
ing resolutions  is  given  in  the  following  form. 

Form  30. — Assignment.    Property  for  Stock. 

ASSIGNMENT. 


In  consideration  of  the  sum  of  One  Dollar  paid  to  me,  Edward 
Dumont  of  the  City  of  New  York,  by  the  Sterling  Ice  Company,  a  cor- 
poration organized  and  existing  under  the  laws  of  the  State  of  New 
Jersey,  the  receipt  whereof  is  hereby  acknowledged,  and  for  other  good 
and  valuable  considerations  to  me  moving,  I  do  hereby  sell,  assign  and 
transfer  to  the  said  Sterling  Ice  Company  all  my  right,  title  and  interest 
in  and  to  certain  new  and  useful  inventions  and  improvements  for  the 
manufacture  of  ice  and  for  refrigeration,  and  for  mechanisms  and  processes 
to  be  used  in  connection  therewith,  all  as  set  forth  in  and  covered  by 
certain  applications  for  patents  filed  in  the  Patent  Office  of  the  United 
States  as  follows : 

Applications  Allowed. 

Serial  No.  895,762,  filed  August  1,  1907. 
"       No.  925,644,    "      October  1,  1907. 
"       No.  925,962,    "      November  1,  1907. 
Applications  Pending. 

Serial  No.  926,182,  filed  January  2,  1908. 
"  No.  928,462,  "  March  2,  1908. 
together  with  the  right,  title  and  interest  in  and  to  all  other  inventions 
relating  to  the  manufacture  of  ice,  to  refrigeration,  or  to  mechanisms  or 
processes  to  be  used  in  connection  therewith,  already  made  by  me,  or 
that  may  be  made  by  me  within  five  years  from  the  3rd  day  of  September, 
1908, 

IN  AND  FOR  the  following  countries : 
United  States  Italy  Austria 

Canada  Australia  Spain 


EXCHANGE  OF  PROPERTY  FOR  STOCK.  255 

Sweden  New  Zealand  Portugal 

Norway  Mexico  Japan 

Denmark  Great  Britain  Brazil 

Belgium  France  Argentine  Confederation 

Switzerland  Germany  Chili 

and  for  all  other  countries  wherein  it  may  be  deemed  profitable  by  said 
Company  to  patent  said  inventions ; 

And  I  hereby  further  undertake  and  agree  to  grant  to  the  said  Com- 
pany licenses  to  use  any  other  inventions  already  made  by  me  or  that  may 
be  made  by  me  within  the  said  period  of  five  years  from  the  3rd  day  of 
September,  1908,  in  so  far,  but  only  so  far  as  such  inventions  are  applic- 
able to  or  may  be  used  in  connection  with  the  manufacture  of  ice  or  with 
refrigeration,  or  with  mechanisms  or  processes  to  be  used  in  connection 
therewith. 

In  pursuance  of  the  foregoing  assignments,  I  do  hereby  authorize  and 
empower  the  said  Company  to  apply  for  and  take  out  all  such  letters 
patent  as  may  be  necessary  to  secure  its  rights  to  the  inventions  and  im- 
provements hereby  assigned,  and  I  agree  and  bind  myself  to  execute  and 
deliver  to  said  Company  from  time  to  time  all  such  further  instruments 
of  transfer  and  assignment,  and  to  do  all  such  further  things  as  may  be 
necessary  or  desirable  to  enable  it  to  secure  said  letters  patent  and  to 
perfect  its  title  to  such  rights  and  inventions ; 

And  I  hereby  authorize  and  request  the  officials  of  the  Patent  Offices 
and  Departments  of  the  several  nations,  countries  and  governments  in  the 
territory  herein  specified,  to  issue  to  the  said  Company,  its  successors  and 
assigns,  any  and  all  letters  patent  that  may  be  granted  for  my  said  in- 
ventions ; 

And  I  hereby  bind  myself,  my  executors  and  administrators,  to  do  all 
things  herein  specified  and  agreed  to  be  done : 

But  it  is  hereby  agreed  that  all  further  assignments,  patent  applica- 
tions, drawings  and  models  furnished  by  me  shall  be  at  the  charge  and 
expense  of  said  Company  and  without  cost  to  me; 

And  it_  is  further  expressly  agreed  that  if  within  ninety  days  of 
written  notice  from  me  or  my  legal  representatives  of  any  invention  made 
by  me  and  covered  by  this  present  agreement,  said  Company  shall  not 
have  taken  due  and  proper  steps  to  secure  letters  patent  therefor  in  any 
part  of  the  territory  hereinbefore  set  forth,  I  or  my  legal  representatives 
may  make  application  for  such  letters  patent  in  such  unoccupied  territory 
and  the  said  Company  shall  have  no  claim  or  title  to  the  patents  so 
secured. 

It  is  the  intent  of  this  assignment  to  convey  to  the  Sterling  Ice  Com- 
pany, its  successors  and  assigns,  the  entire  interest  for  the  whole  world 
in  any  and  all  inventions  and  improvements  in  mechanisms  for  the  man- 
ufacture of  ice  and  for  refrigeration,  or  relating  thereto,  so  far  as  the  same 
may  be  applicable,  now  made  by  me  or  that  may  hereafter  be  made  by 
me  within  five  years  from  the  3rd  day  of  September,  1908. 

Witness  my  hand  and  seal  this  5th  day  of  September,  1908. 

Edward  Dumont.     (L.  S.) 


This  assignment  is  general  in  its  form  and  carries  the 
rights  to  the  inventions  covered  by  its  terms  without  fur- 
ther specific  assignment.  In  practice,  how^ever,  individual 
assignments  of  each  invention  for  each  country  would 


256  FORMS  RELATING  TO  INCORPORATION. 

probably  be  required  for  filing  in  the  proper  patent  office. 
As  a  precautionary  measure,  but  not  as  a  matter  of  neces- 
sity, the  assignment  as  given  should  be  acknowledged. 

Stock  given  in  exchange  for  property  may  either  be 
issued  in  one  or  more  certificates  to  the  owner  of  the  prop- 
erty, who  then  breaks  up  the  certificates  and  distributes 
the  stock  as  may  be  necessary,  or  it  may  be  issued  direct 
to  the  parties  named  by  him.  The  procedure  in  either 
case  is  equally  effective,  as  payment  to  his  order  is  as 
effective  as  if  made  to  him  direct.  If  the  stock  is  issued 
to  his  order,  the  owner's  instructions  to  the  secretary 
might  be  in  the  following  form. 

Form  31. — Instructions  for  Issuance  of  Stock. 


To  the  Secretary  of  the 

Sterling  Ice  Company, 
Jersey  City,  N.  J. 
Dear  Sir: — 

Pursuant  to  the  terms  of  the  resolution  adopted  by  the  Directors  of 
your  Company  on  September  3rd,  1908,  accepting  my  proposition  of  Sep- 
tember 2nd,  1908,  and  authorizing  the  issue  of  the  entire  capital  stock 
of  said  Company,  full-paid  and  non-assessable,  to  my  order,  save  the 
shares  subscribed  for  by  the  incorporators,  you  are  hereby  authorized  and 
instructed  to  issue  said  stock  of  the  Sterling  Ice  Company  in  the  follow- 
ing names : 

Preferred  Stock. 

John   Mackey 500  shares. 

Edward    Dumont 500       " 

Common  Stock. 

Henry  Brown- Ayres 150  shares. 

Theodore  McFarrell 200       " 

Horace  H.  Wight 150       " 

Edward  Dumont 988     /' 

The  certificates  issued  in  accordance  with  the  foregoing  instructions 
are  to  be  delivered  to  me. 

Yours   very   truly, 

Edward  Dumont. 
New  York,  September  5,  1908. 


CHAPTER  XXVII. 
FORMS  FOR  FIRST  MEETINGS. 


(a)  Calls  and  Waivers. 

When  its  charter  is  granted,  the  corporation  is  a  legal 
entity,  entitled  to  all  corporate  rights  and  privileges,  but 
wholly  unprovided  with  the  mechanism  through  which 
these  are  ordinarily  secured.  Primarily  the  object  of  the 
first  meetings  is  to  perfect  the  organization  of  the  corpora- 
tion and  thereby  supply  this  need. 

In  some  few  states  the  charter  itself  provides  for  the 
time  and  place  of  the  first  meeting  of  stockholders.  In 
some  other  states  the  statutes  prescribe  the  method  by 
which  it  may  be  called.  Unless  otherwise  prescribed,  the 
first  meetings — both  of  stockholders  and  directors — are 
most  conveniently  and  commonly  assembled  by  means  of 
calls  and  waivers.     (See  also  Ch.  XXVIII.) 

Calls  and  waivers  should  be  signed  before  the  time  of 
meeting  or  at  the  meeting.  Occasionally  signatures  of 
parties  absent  from  the  meeting  are  affixed  later,  and — 
though  the  practice  is  not  to  be  commended — are  held  to 
be  effective.  In  the  majority  of  states  the  incorporators 
named  in  the  charter  are  the  only  parties  entitled  to  attend 
the  first  meeting  of  stockholders  and  to  sign  its  call  and 
waiver.     (See  §  58.) 

The  following  form  of  call  and  waiver  for  the  first 
meeting  of  stockholders  will  serve  for  any  state.  It  is 
simple  but  sufficient  unless  specially  important  action  is 
contemplated. 

257 


258  FORMS  REI^ATING  TO   INCORPORATION. 

Form  32. — Call  and  Waiver.    Stockholders'.    Short  Form. 

Cali*  and  Waiver  of  Notice. 


FIRST  MEETING  OF  STOCKHOLDERS. 


We,  the  undersigned,  all  the  incorporators  and  stockholders  of  the 
Crystal  Spring  Water  Company,  do  hereby  call  the  first  meeting  of  the 
stockholders  thereof,  to  be  held  in  the  office  of  the  company  at  Wanaque, 
New  Jersey,  at  10  o'clock  A.  M.  on  the  5th  day  of  October,  1908,  for  the 
organization  of  the  Company  and  the  transaction  of  all  such  other  business 
as  may  be  incident  thereto,  and  we  hereby  waive  all  requirements  as  to 
notice  of  such  meeting  and  consent  to  the  transaction  thereat  of  any  and 
all  business  pertaining  to  the  aff'airs  of  the  Company. 

Wanaque,  New  Jersey,  Henry  W.  Hallock. 

October  5,  1908.  Geo.  W.  McGowan. 

Harry  H.  Parker. 

For  the  larger  corporations  or  when  specially  import- 
ant action  is  to  be  taken  at  the  first  stockholders'  meeting, 
a  more  formal  call  and  waiver  is  frequently  desirable, 
stating  specifically  the  important  matters  to  be  considered, 
as  in  the  following  form. 

Form  33. — Call  and  Waiver.     Stockholders'.     Extended 
Form. 

Call  and  Waiver  oe  Notice. 


FIRST  MEETING  OF  STOCKHOLDERS. 


We,  the  undersigned,  all  the  incorporators  of  the  Sterling  Ice  Com- 
pany and  all  the  subscribers  to  its  capital  stock  entitled  to  notice  of  said 
meeting,  do  hereby  call  the  first  meeting  of  the  stockholders  of  said  cor- 
poration to  be  held  in  the  office  of  the  Company  at  No.  275  Montgomery 
St.,  Jersey  City,  New  Jersey,  at  3  o'clock  in  the  afternoon  on  the  3rd  day 
of  September,  1908.  for  the  purpose  of  receiving  the  Company's  charter, 
adopting  by-laws,  electing  directors,  considering  and  acting  upon  a  prop- 
osition for  the  issue  of  the  entire  capital  stock  of  the  Company  in  exchange 
for  property,  and  the  transaction  of  all  such  other  business  as  may  be 
necessary  or  desirable  in  connection  with  the  organization  or  affairs  of 
said  corporation,  and  we  do  hereby  waive  all  statutory  requirements  as  to 
notice  or  publication  of  the  time,  place  and  purposes  of  this  first  meeting, 
and  consent  to  the  transaction  thereat  of  any  and  all  business  pertaining 
to  the  affairs  of  the  Company. 

Jersey  City,  N.  J.,  Harry  H.  Sterling. 

September  3rd,  1908.  Edward   Peneold. 

Oscar   McComb. 

James  Hamilton 

When  this  call  and  waiver  is  used  in  a  state  where  the 


FIRST  MEETINGS.  259 

directors  are  appointed  by  charter  provision,  as  in  New 
York,  the  reference  to  election  of  directors  is  omitted. 

The  first  meeting  of  directors  is  also  usually  assembled 
by  means  of  call  and  waiver.  The  call  is  usually  formal, 
stating  fully  the  objects  of  the  meeting  but  also  containing 
a  blanket  clause  permitting  the. consideration  of  any  other 
business  relating  to  the  affairs  of  the  company. 

Form  34. — Call  and  Waiver  of  Notice.    Directors'. 

Call  and  Waiver  of  Notice. 


FIRST  MEETING  OF  DIRECTORS. 


We,  the  undersigned,  all  the  directors  of  the  Sterling  Ice  Company, 
do  hereby  call  the  first  meeting  of  its  directors  to  be  held  in  the  office  of 
the  Company  at  No.  275  Montgomery  St.,  Jersey  City,  New  Jersey,  at  4 
o'clock  in  the  afternoon,  on  the  3rd  day  of  September,  1908,  for  the  pur- 
pose of  electing  officers  of  the  Company,  acting  upon  a  proposition  for  the 
issue  of  the  entire  capital  stock  of  the  Company  in  exchange  for  property, 
and  the  transaction  of  all  such  other  business  as  may  be  necessary  or 
desirable  in  connection  with  the  organization  of  the  Company  and  the 
promotion  of  its  business,  and  we  hereby  waive  all  statutory  and  by-law 
requirements  as  to  notice  of  time,  place  and  object  of  this  first  meeting, 
and  consent  to  the  transaction  thereat  of  any  and  all  business  pertaining 
to  the  aflFairs  of  the  Company. 

Jersey  City,  N.  J.,  Harry  H.  Sterling. 

September  3rd,  1908.  Edward  Penfold. 

Oscar  McComb. 

Henry  Brown-AyrEs. 

Theodore    McCarroll. 

(b)  Proxies. 

Proxies  for  the  first  meeting  of  stockholders  differ  but 
little  from  proxies  for  other  meetings,  though  they  are 
usually  limited  to  the  particular  meeting  and  its  adjourn- 
ments. A  simple  form  of  proxy  legally  sufficient  for  or- 
dinary purposes,  is  as  follows: 

Form  35. — Proxy.    First  Meeting  of  Stockholders. 

Proxy. 


FIRST  MEETING  OF  STOCKHOLDERS. 


I,  the  undersigned,  an  incorporator  and  a  subscriber  to  the  stock  of 
the  Holly  Rolling  Mill  Company  of  New  York,  hereby  appoint  George  I. 


260  FORMS  KElyATING  TO   INCORPORATION. 

McGowan  my  true  and  lawful  attorney,  with  full  power  of  substitution 
and  revocation,  to  represent  me,  and  to  vote  in  my  name,  place  and  stead 
at  the  first  meeting  of  the  stockholders  of  said  corporation,  to  be  held  in 
the  office  of  John  H.  McGowan,  No.  226  South  St.,  New  York  City,  on  the 
10th  day  of  October,  1908,  at  3  o'clock  P.  M.,  and  at  any  adjournment 
thereof. 

Witness  my  hand  and  seal  this  8th  day  of  October,  1908. 

Henry  J.  Clifford. 
Witnessed  by 

Samuel  B.  Fremont. 

If  a  more  formal  proxy  is  desirable,  the  following  form 
may  be  used. 

Form  36. — Formal  Proxy.     First  Meeting  of  Stockholders. 

Proxy. 


FIRST  MEETING  OF   STOCKHOLDERS. 


Know  All  Men  by  These  Presents  : 

That  I,  the  undersigned,  one  of  the  incorporators  and  a  subscriber 
to  the  stock  of  the  Sterling  Ice  Company  of  New  Jersey,  do  hereby  con- 
stitute and  appoint  Harry  H.  Sterling  my  true  and  lawful  attorney  with 
full  powers  of  substitution  and  revocation,  to  represent  me  at  the  first 
meeting  of  the  stockholders  of  said  corporation,  to  be  held  in  the  office 
of  the  Company,  No.  275  Montgomery  St.,  Jersey  City,  New  Jersey,  at  3 
o'clock  in  the  afternoon,  on  the  3rd  day  of  September,  1908,  and  at  any 
meeting  postponed  or  adjourned  therefrom,  hereby  granting  my  said  at- 
torney full  power  and  authority  to  act  for  me  at  said  meeting,  and,  in  my 
name,  place  and  stead,  to  vote  thereat  upon  the  stock  of  said  corporation 
subscribed  for  by  me  or  upon  which  I  may  then  be  entitled  to  vote,  in  the 
transaction  of  any  and  all  business  pertaining  to  the  affairs  of  the  Com- 
pany that  may  be  brought  before  said  meeting,  all  as  fully  as  I  might  or 
could  do  if  personally  present,  and  I  hereby  ratify  and  confirm  all  that  my 
said  attorney,  or  his  substitute  shall  lawfully  do  at  such  meeting  in  my 
name,  place  and  stead. 

In  Witness  WhErEof,  I  have  hereunto  affixed  my  signature 
and  seal  this  2nd  day  of  September,  1908. 

Oscar  McComb.    (L.  S.) 

In  the  presence  of 

Jasper  T.  Harrington. 

(For  additional  forms  of  proxies  see  Forms  62-71.) 

(c)  Minutes  of  First  Meetings. 

As  a  rule,  the  first  meetings  of  a  new  corporation  are 
purely  formal.  Their  minutes  are  usually  prepared  be- 
fore the  time  of  meeting  by  the  attorneys  who  have  the 
incorporation  in  charge,  and  these  minutes  are  followed  to 
the  letter. 


FIRST  MEETINGS.  261 

At  the  first  meeting  of  the  stockholders,  which  ordin- 
arily precedes  the  first  meeting  of  directors,  the  charter  is 
to  be  received,  by-laws  are  to  be  adopted,  and,  save  in 
those  states  where  appointed  by  the  charter,  directors  are 
to  be  elected.  The  stockholders  also  usually  pass  resolu- 
tions at  their  first  meeting  specially  authorizing  directors 
to  act  on  any  matters  of  exceptional  importance,  such  as 
an  exchange  of  stock  for  property. 

In  some  states,  as  New  York,  the  directors  for  the  first 
year  are  designated  by  the  charter  and  have  power  to 
adopt  by-laws.  The  preliminary  meeting  of  stockholders 
then  loses  much  of  its  importance,  but  when  any  specially 
important  action  is  to  be  taken  by  the  board,  such  as  an 
exchange  of  property  for  stock,  it  is  still  usually  held  in 
order  to  secure  the  stockholders'  approval  of  such  action. 
(See  Ch.  XXVI.) 

At  the  first  meeting  of  directors,  which  usually  imme- 
diately follows  the  adjournment  of  the  first  meeting  of 
stockholders,  officers  are  to  be  elected,  action  is  taken  on 
any  proposed  exchange  of  stock  for  property,  and  pro- 
vision must  be  made  for  the  various  details  necessary  to 
inaugurate  the  company's  operations. 

Stockholders'  meetings,  unless  otherwise  expressly  per- 
mitted by  statute  provision,  must  be  held  within  the  state 
in  which  the  company  has  been  incorporated.  (See  §  78.) 
Where,  as  is  frequently  the  case,  all  or  a  majority  of  the 
incorporators  reside  outside  the  state  of  incorporation — 
as  for  instance,  where  citizens  of  New  York  organize  a 
company  under  the  laws  of  Maine  or  Arizona — the  re- 
quirement that  the  first  meeting  of  stockholders  must  be 
held  within  the  incorporating  state  is  complied  with  by 
means  of  proxies. 

The  following  minutes  follow  the  requirements  of  the 
New  Jersey  laws,  but  may  be  readily  adapted  for  use  in 
any  other  state. 


262  FORMS   REI^ATING  TO   INCORPORATION. 

Form  37. — Minutes.     Stockholders'. 

STERLING  ICE  COMPANY. 


Minutes  of  First  Meeting  of  Stockholders. 
Held  September  3rd,  1908. 


Pursuant  to  written  Call  and  Waiver  of  Notice,  the  first  meeting  of 
the  stockholders  of  the  Sterling  Ice  Company  was  held  in  the  office  of  the 
Company,  No.  275  Montgomery  Street,  Jersey  City,  New  Jersey,  at  3 
o'clock  in  the  afternoon,  on  the  3rd  day  of  September,  1908,  with  all  the 
stockholders  present  either  in  person  or  by  proxy. 

Mr.  Harry  H.  Sterling  called  the  meeting  to  order  and  by  motion 
unanimously  carried  was  appointed  temporary  Chairman.  Mr.  Edward 
Penfold  was  appointed  Secretary  pro  tern. 

The  following  stockholders  were  present  in  person  or  by  proxy : 

Name.  Name  of  Proxy.  Shares   Subscribed. 

Harry  H.  Sterling (In  person) 5 

Edward  Penfold "        "         3 

Oscar  McComb Harry  H.  Sterling 2 

James  Hamilton S.  J.  Stillman 2 

The  Secretary  presented  the  Call  and  Waiver  of  Notice  pursuant  to 
which  the  meeting  was  held,  duly  signed  by  all  the  incorporators  of  the 
Company.  On  motion  it  was  ordered  entered  in  the  Minute  Book  imme- 
diately following  the  minutes  of  the  meeting. 

The  Chairman  presented  a  copy  of  the  Certificate  of  Incorporation  of 
the  Company,  stating  that  the  original  had  been  recorded  in  the  office  of 
the  Clerk  of  Hudson  County  on  the  1st  day  of  September,  1908,  and  was 
filed  in  the  office  of  the  Secretary  of  State  at  Trenton  on  the  same  day. 
On  motion  the  said  Certificate  of  Incorporation  was  ordered  received  and 
entered  in  full  upon  the  first  pages  of  the  Book  of  Minutes. 

The  Secretary  then  presented  a  form  of  By-laws  prepared  by  Coun- 
sel of  the  Company,  which  was  read  article  by  article  and  was,  as  a 
whole,  unanimously  adopted  and  was  ordered  entered  in  full  upon  the 
Book  of  Minutes  immediately  succeeding  the  Certificate  of  Incorporation. 

The  Chairman  announced  the  next  business  in  order  to  be  the  elec- 
tion of  five  directors  as  required  by  the  By-laws  of  the  Company,  and 
thereupon  appointed  Messrs.  Warren  Clayton  and  S.  J.  Stillman  Inspectors 
of  Election.  Said  Inspectors  were  duly  sworn  and  proceeded  to  open  the 
polls  and  receive  ballots.  (See  Forms  101-108.)  All  the  stockholders  en- 
titled to  vote  at  said  election  having  voted  in  person  or  by  proxy,  the 
polls  were  closed  and  the  Inspectors  presented  their  report  showing  that 
ballots  were  cast  as  follows : 

FOR  DIRECTORS.  VOTES. 

Harry  H.   Sterling 12 

Edward  Penfold   12 

Oscar  McComb   12 

Henry  Brown-Ayres   12 

Theodore  McFarrell   12 

The  parties  designated  were  thereupon  declared  the  duly  elected  Di- 
rectors of  the  Company.  It  was  ordered  that  the  Oath  and  Report  of  the 
Inspectors  be  entered  in  the  Minute  Book  following  the  minutes  of  the 
meeting. 


:PIRST  MEETINGS.  263 

On  motion  duly  made  and  seconded,  the  following  resolution  was 
unanimously  adopted : 

Resolved,  That  the  principal  office  of  the  Company  in  the  State  of 

New  Jersey  shall  be  at  No.  275  Montgomery  Street,  Jersey  Citv.  New 

Jersey,  and  the  agent  in  charge  thereof  upon  whom  process  ma>   be 

served  shall  be  John  H.  Welch. 

The  Secretary  then  presented  a  proposition  from  Edward  Dumont  of 
New  York  City,  offering  to  assign  to  the  Company  in  exchange  for  its 
entire  capital  stock  certain  rights  and  inventions  for  the  manufacture  of 
ice,  for  refrigeration,  and  for  mechanisms  and  processes  used  in  connec- 
tion therewith.     (See  Form  26.) 

Said  proposition  was  ordered  received  and  the  following  resolution 
in  regard  thereto  was  moved,  seconded  and  unanimously  adopted : 

{See  Form  28.) 

There  being  no  further  business  before  the  meeting,  it  was  adjourned. 

Harry  H.   Sterling,  Edward   Penfold, 

Chairman.  Secretary. 


In  pursuance  of  the  instructions  of  the  foregoing  minutes,  the  follow- 
ing instruments  are  entered  in  the  order  given  on  the  Minute  Book  of  the 
Company  preceding  the  minutes  of  the  present  meeting: 

1.  Certificate  of  Incorporation.     (See  Forms  22,  23.) 

2.  By-Laws.     (See  Forms  24,  25.) 

and  the  documents  given  below  follow  the  minutes  of  the  present  meeting: 

1.  Call  and  Waiver  of  Notice.     (See  Forms  32,  33.) 

2.  Oath  and  Report  of  Inspectors  of  Election.     (See  Forms  104,  105.) 

Edward  Penfold, 

Secretary. 

The  various  instruments  received  during  the  course  of 
a  meeting  are  frequently  ordered  embodied  in  the  minutes 
instead  of  following  them.  There  is  no  objection  to  the 
arrangement  save  that  it  interrupts  the  continuity  of  the 
text. 

The  proposition  for  exchange  of  property  for  stock 
might  have  been  entered  in  full  on  the  stockholders'  min- 
utes but  is  better  reserved  for  inclusion  in  the  minutes  of 
the  directors'  meeting,  where  it  is  finally  acted  upon.  If 
entered  on  the  minutes  of  the  stockholders'  meeting,  it 
should  also  appear  on  the  minutes  of  the  directors'  meet- 
ing. 

In  New  York  the  election  of  directors  is  omitted,  the 
directors  for  the  first  year  having  already  been  appointed 
by  the  charter.  The  formal  adoption  of  the  principal 
office  of  the  company  and  the  appointment  of  an  agent  in 
charge  thereof  by  the  stockholders,  is  peculiar  to  New 


264  PORMS  RELATING  TO  INCORPORATION. 

Jersey.  The  appointment  of  inspectors  of  election,  who 
must  be  sworn,  is  a  New  Jersey  requirement,  but  is  found 
in  New  York  and  some  other  states  as  well. 

Form  38. — Minutes.     Directors'. 

STERLING  ICE  COMPANY. 


Minutes  of  First  Meeting  of  Directors. 
Held  September  3rd,  1908. 


Pursuant  to  written  Call  and  Waiver  of  Notice,  the  Board  of  Di- 
rectors of  the  Sterling  Ice  Company  held  its  first  meeting  in  the  office  of 
the  Company,  No.  275  Montgomery  Street,  Jersey  City,  New  Jersey,  at  4 
o'clock  in  the  afternoon,  on  the  3rd  day  of  September,  1908. 

Mr.  Harry  Sterling  was  chosen  temporary  Chairman  and  called  the 
meeting  to  order.  Mr.  Edward  Penfold  was  appointed  temporary  Sec- 
retary. 

There  were  present  Messrs.  Harry  H.  Sterling,  Edward  Penfold, 
Oscar  McComb,  Henry  Brown-Ayres  and  Theodore  McFarrell,  constitut- 
ing the  entire  membership  of  the  Board. 

The  Secretary  presented  the  Call  and  Waiver  of  Notice,  signed  by 
all  the  directors,  pursuant  to  which  the  meeting  was  held.  Said  Call  and 
Waiver  was  ordered  spread  upon  the  Minute  Book  immediately  following 
the  minutes  of  the  meeting. 

The  President  then  stated  that  Messrs.  Henry  Brown-Ayres  and 
Theodore  McFarrell  had  become  stockholders  of  the  Company  and  were 
therefore  qualified  to  act  as  its  directors  by  virtue  of  assignments,  exe- 
cuted by  him  under  date  of  September  3rd,  1908,  transferrmg  one  share 
of  stock  to  each  of  the  said  parties.  Said  assignments  were  thereupon 
exhibited  to  the  meeting,  and,  Messrs.  Brown-Ayres  and  McFarrell  not 
voting,  were  recognized  and  agreed  to  by  the  Board  on  behalf  of  the 
Company. 

The  Chairman  then  presented  a  form  of  By-laws  adopted  by  the 
stockholders  at  their  first  meeting,  and  stated  that  the  first  business  there- 
under was  the  election  of  a  President,  Vice-President,  Secretary  and 
Treasurer,  to  serve  for  the  ensuing  corporate  year  and  until  the  election 
and  acceptance  of  their  successors.  The  following  officers  were  then 
elected  by  unanimous  vote : 

President    Harry  H.  Sterling. 

Vice-President    Oscar  McComb. 

Secretary    Edward  Penfold. 

Treasurer   James  Hamilton. 

The  Secretary-elect  having  been  duly  sworn,  the  permanent  officers 
of  the  Company  took  charge  of  the  meeting. 

As  required  by  the  By-laws,  the  Treasurer  then  submitted  a  bond  in 
the  sum  of  Five  Thousand  ($5,000)  Dollars,  signed  by  himself  as  prin- 
cipal and  by  the  Fidelity  Guarantee  Company  of  Augusta,  Maine,  as 
surety.  The  form  and  surety  of  said  bond  were  thereupon  approved  by 
the  Board,  and  the  bond  was  ordered  received  and  filed  in  the  custody 
of  the  Secretary.     (See  Form  196.) 


FIRST  MEETINGS.  265 

The  President  then  presented  to  the  meeting  a  written  proposition 
from  Edward  Dumont  of  New  York  City  (See  Form  26),  offering  to 
sell  and  assign  to  the  Company  certain  rights  in  and  to  his  inventions  re- 
lating to  the  manufacture  of  ice  and  to  refrigeration,  and  to  mechanisrns 
and  processes  to  be  used  in  connection  therewith,  all  as  set  forth  in  said 
proposition,  in  exchange  and  full  payment  for  the  entire  capital  stock  of 
the  Company;  also  a  resolution  of  the  stockholders  approving  the  ex- 
change and  instructing  the  Board  of  Directors  to  accept  the  said  proposi- 
tion. (See  Form  28.)  Mr.  Dumont's  proposition  was  thereupon  or- 
dered received  and  spread  upon  the  Minute  Book  following  the  minutes 
of  the  meeting,  and,  after  some  discussion,  the  following  resolution  re- 
lating thereto  was  unanimously  adopted : 

{See  Form  29.) 
The  Secretary  then  presented  for  approval  forms  of  stock  certificates 
for  both  common  and  preferred  stock.  Upon  motion  the  forms  as  pre- 
sented were  adopted  as  the  stock  certificates  of  the  Company,  and  the 
Secretary  was  instructed  to  spread  said  forms  upon  the  Minute  Book  of 
the  Company  following  the  minutes  of  the  meeting. 

Upon  motion  duly  made  and  seconded,  the  following  resolutions  were 
unanimously  adopted : 

Resolved,  That  the  assignment  of  the  inventions  of  Edward  Du- 
mont to  this  Company  in  accordance  with  the  terms  of  his  proposi- 
tion of  September  2nd,  1908,  and  pursuant  to  the  resolution  of  ac- 
ceptance thereof  adopted  at  this  present  meeting,  shall,  as  stipulated 
in  said  proposition,  be  recognized  and  accepted  as  payment  in  full 
of  the  stock  subscribed  for  by  the  incorporators  of  this  Company 
as  set  forth  in  its  Certificate  of  Incorporation. 

Resoev'Ed,  That  the  President  and  Treasurer  be  authorized  to  sell 
and  grant  to  the  Melrose  Refrigerating  Company,  the  right  to  use 
the  Dumont  Process  in  their  plant  on  Staten  Island,  said  Company 
paying  therefor  an  annual  royalty  of  $2,000. 

Resolved,  That  the  officers  of  the  Company  be  hereby  authorized 
to  lease  an  office  for  the  use  of  the  Company  at  No.  755  Broadway, 
New  York  City,  at  a  rental  not  exceeding  Seventy-five  ($75)  Dol- 
lars per  month,  and  that  the  regular  meetings  of  the  Board  of  Di- 
rectors shall  be  held  at  said  office  save  as  otherwise  resolved  by 
the  Board. 

{See  Forms  84,  85  for  Resolutions  authorising  opening  of  hank 
account.) 
Motions  as  follows  were  also  adopted  by  unanimous  vote : 

That  the  Secretary  be  authorized  and  instructed  to  have  pre- 
pared five  hundred  certificates  of  common  stock  and  five  hundred 
certificates  of  preferred  stock,  in  the  forms  adopted  by  the  Board 
of  Directors,  and  also  to  provide  a  corporate  seal  in  the  form  pre- 
scribed by  the  By-laws  of  the  Company,  and  that  in  addition  thereto 
he  be  authorized  and  instructed  to  provide  such  stock  and  transfer 
books,  stationery  and  office  supplies  as  are  now  necessary  for  the 
purposes  of  the  Company. 

That  the  Treasurer  be  authorized  and  instructed  to  pay  from  the 
Company's  funds  all  expenses  properly  incurred  in  the  incorpora- 
tion of  the  Company,  the  total  of  such  payments  not  to  exceed 
Seven   Hundred    ($700)    Dollars. 

That  the  Treasurer  be  authorized  and  instructed  to  purchase 
such  books  of  account  as  are  necessary  for  the  proper  record  of 
the  Company's  business  operations. 

That  the  Secretary  be  instructed  to  prepare  the  Certificate  of  Elec- 
tion of  directors  and  officers  required  by  the  New  Jersey  statutes, 


266  FORMS  RELATING  TO  INCORPORATION. 

and,  after  its  due  execution  by  the  proper  officers  of  the  Company,  to 
file  the  same  in  the  office  of  the  Secretary  of  State  of  New  Jer- 
sey within  thirty  days  from  date,  and  that  a  copy  of  said  Certificate 
be  spread  upon  the  Minute  Book  following  the  minutes  of  the 
present  meeting. 
There  being  no  further  business  before  the  meeting,  it  was  ad- 
journed. 

Harry  H.  Sterling,  Edward  Penfold, 

President.  Secretary. 


In  pursuance  of  the  instructions  of  the  preceding  minutes,  the  fol- 
lowing are  hereunto  appended  in  the  order  given : 

1.  Call  and  Waiver  of  Notice.     (See  Form  34.) 

2.  Secretary's  Oath  of  Office. 

3.  Written    Proposition   of   Edward   Dumont   to    Exchange    Prop- 

erty for  the  Entire  Stock  of  the  Company.     (See  Form  26.) 

4.  Forms  of  Stock  Certificates.     (See  Form  16,  18.) 

5.  Certificate  of  Election. 

Edward  Penfold, 

Secretary, 

The  secretary's  oath  of  office  and  the  report  to  the  Sec- 
retary of  State  are  local  forms  and  are  not  given  here. 
The  waiver  of  notice  of  assessments  by  the  incorporators, 
usual  in  the  organization  proceedings  of  New  Jersey  cor- 
porations, is  not  necessary  in  the  foregoing  proceedings, 
as  the  stock  subscribed  for  by  the  incorporators  is  with 
their  consent  included  in  the  stock  issued  for  property  and 
is  paid  in  full  thereby. 


PART  VII.— FORMS  RELATING  TO  MEETINGS. 


CHAPTER  XXVIII. 
CALLS  AND  WAIVERS. 


Regular  meetings  both  of  stockholders  and  directors 
are  held  at  fixed  times  usually  prescribed  by  the  by-laws. 
If  in  the  interim  between  these  regular  meetings  matters 
arise  calling  for  action,  special  meetings  become  necessary. 
Such  meetings  are  assembled  either  by  the  call  and  waiver, 
or  by  a  formal  call  followed  by  notice. 

The  call  and  waiver  is  a  single  instrument  consisting  of 
two  parts;  first,  a  call  for  the  desired  meeting  and,  second, 
a  waiver  of  all  statutory,  charter  or  by-law  requirements 
for  notice  thereof.  (See  §§  96,  98.)  This  call  and  waiver 
must  be  signed  by  every  person  entitled  to  be  present  at 
its  meeting.  Those  signing  are  thereby  estopped  from 
any  future  objection  to  the  omission  of  the  usual  or  re- 
quired formalities  of  the  meeting.  No  one  else  has  a  right 
to  object;  hence  the  call  and  waiver  may  be  safely  used 
even  though  the  by-laws  of  the  company  provide  a  differ- 
ent method  of  assembling  special  meetings. 

The  call  followed  by  notice  is  the  method  of  assembling 
special  meetings  usually  prescribed  by  the  by-laws,  and 
involves  the  use  of  two  separate  instruments ;  first,  the  call 
signed  by  some  competent  party  or  parties  and,  second, 
pursuant  to  this  call,  a  notice  of  the  meeting.  (See  §§ 
96,  97.)  The  call  and  waiver  permits  of  an  immediate 
meeting,  or  a  later  meeting,  according  to  its  terms.     The 

267 


268  S'ORMS    RElvATiNG    TO    MEIEJTINGS. 

call  with  notice  involves  the  delay  incident  to  formal 
notice,  usually  ranging  from  three  to  ten  days.  (See  Ch, 
XXIX.) 

The  first  meetings  of  both  stockholders  and  directors 
are  usually  assembled  by  means  of  calls  and  waivers.  It 
is,  however,  but  seldom  that  the  call  and  waiver  is  em- 
ployed thereafter  to  assemble  meetings  of  stockholders, 
on  account  of  the  difficulty — save  in  the  smaller  corpora- 
tions— of  securing  the  signature  of  every  party  entitled 
to  be  present  at  the  meeting.  Special  meetings  of  the 
directors  are  commonly  assembled  by  means  of  the  call 
and  waiver. 

(a)  Special  Meetings  of  Stockholders. 

Forms  of  calls  and  waivers  to  assemble  the  first  meet- 
ing of  stockholders  have  already  been  presented.  (See 
Forms  32,  33.)  The  following  form  is  for  use  after  or- 
ganization. 

Form  39. — Call  and  Waiver.     Special  Meeting  of  Stock- 
holders. 

CHELTINGHAM    LINEN    COMPANY. 


Call  and  Waiver. 
SPECIAL  MEETING  OF  STOCKHOLDERS. 


We,  the  undersigned,  being  all  the  stockholders  of  the  Cheltingham 
Linen  Company  of  Trenton,  New  Jersey,  hereby  call  a  special  meeting 
of  the  stockholders  of  said  Company  to  be  held  in  the  Company's  office, 
No.  275  Main  Street,  Trenton,  New  Jersey,  on  the  21st  day  of  October 
1908,  at  3  o'clock  in  the  afternoon,  for  the  purpose  of  considering  and 
acting  upon  a  proposition  for  the  consolidation  of  this  Company  with  the 
Wilson  Thread  Company  of  Trenton,  New  Jersey,  and  we  hereby  waive 
all  statutory  and  by-law  requirements  as  to  notice  of  time,  place  and 
objects  of  said  meeting,  and  agree  to  the  transaction  thereat  of  any  and 
all  business  pertaining  to  the  affairs  of  the  Company. 
Trenton,  N.  J.,  James  H.  McLain.  Frank  H.   Small. 

October  17,  1908.        Theodore  McGowan.        William    T    Masters. 

Joseph  H.  French.  John    H.    Meade. 

Charles  P.  HendEpson.  Henry  T.  Arnold. 

David  B.  Adams.  William  Rollands. 

Where  the  number  of  stockholders  is  large,  the  call 


CALLS  AND  WAIVERS.  269 

followed  by  notice  is  used  in  assembling  special  meetings. 
The  call  itself  authorizes  the  meeting  as  set  forth  in  its 
terms.     (See  §  96.) 

When  a  call  for  a  special  meeting  is  issued  by  the 
president,  it  should  be  directed  to  the  secretary. 

Form  40. — President's  Call.      Special  Meeting  of  Stock- 
holders. 


HUDSON    NAVIGATION    COMPANY. 
270  Broadway,  New  York. 


Mr.  Henry  H.  Sheldon, 

Secretary  Hudson  Navigation  Co.  : 

You  are  hereby  authorized  and  instructed  to  send  out  notice  of  a 
special  meeting  of  the  stockholders  of  this  Company  hereby  called  by 
me,  said  meeting  to  be  held  in  the  office  of  the  Company,  No.  270  Broad- 
way, New  York  City,  on  the  15th  day  of  September,  1908,  at  10  o'clock 
A.  M.,  for  the  purpose  of  considering  and  acting  upon  a  proposition  to 
sell  the  entire  property  and  assets  of  the  Company,  and  for  the  trans- 
action of  any  and  all  business  in  connection  therewith  that  may  properly 
come  before  said  meeting. 

September  1,  1908.  Harry  M.  Moody, 

President. 

This  call  is  handed  or  sent  to  the  secretary  who  there- 
upon sends  out  notices  of  the  meeting.     (Forms  52-54.) 

Form  41. — President's  Call.     Special  Meeting  of  Stock- 
holders.    Formal. 

HUDSON  NAVIGATION  COMPANY. 
270  Broadway,  New  York. 


Mr.  Henry  H.  Sheldon, 

Secretary  of  the  Hudson  Navigation  Co. 

Dear  Sir  : — In  accordance  with  the  authority  vested  in  me  by  the 
By-laws  of  this  Company,  I  hereby  call  a  special  meeting  of  the  stock- 
holders to  be  held  in  the  office  of  the  Company,  No.  270  Broadway,  New 
York,  on  the  15th  day  of  September,  1908,  at  10  o'clock  in  the  forenoon, 
for  the  purpose  of  considering  and  acting  upon  a  proposition  to  sell  the 
entire  property  and  assets  of  the  Company,  and  for  the  transaction  of 
any  and  all  business  in  connection  therewith  that  may  properly  come  be- 
fore said  meeting,  and  I  hereby  authorize  and  instruct  you  to  give  due 
notice  of  said  meeting  to  the  stockholders  of  this  Company  in  accord- 
ance with  the  requirements  of  its  By-laws. 

September  1,  1908.  Harry  M.  Moody, 

President. 


270  FORMS    RELATING    TO    MEETINGS. 

A  directors'  call  for  a  special  meeting  of  stockholders 
(See  §  96)  must,  according  to  the  requirements  of  the 
by-laws,  either  be  addressed  to  the  president,  who  in  his 
turn  instructs  the  secretary  to  issue  notice  of  the  meet- 
ing so  called,  or  to  the  secretary  as  in  the  following  form, 
save  when  occasionally  the  by-laws  permit  direct  publi- 
cation notice  by  the  directors. 

Form  42. — Directors'    Call.     Special   Meeting   of   Stock- 
holders. 

Call  for  Special  Meeting  oe  Stockholbers. 


We,  the  undersigned,  directors  of  the  Hudson  Navigation  Company, 
do  hereby  call  a  special  meeting  of  the  stockholders  of  said  Company  to 
be  held  in  its  office,  No.  270  Broadway,  New  York,  on  the  15th  day  of 
September,  1908,  at  10  o'clock  in  the  forenoon,  for  the  purpose  of  taking 
action  on  a  proposition  to  sell  the  entire  property  and  assets  of  the  Com- 
pany, and  for  the  transaction  of  any  and  all  business  necessary  in  con- 
nection therewith,  and  we  do  hereby  authorize  and  instruct  the  Secretary 
of  the  Company  to  send  out  notice  of  said  special  meeting  in  accordance 
with  the  by-law  requirements  of  this  Company. 

New  York  City,  New  York,  John  H.   Goodrich. 

September  1,  1908.  Henry   B.    Merrill. 

Arthur  C.  McCall. 
To  Mr.  Henry  H.  Sheldon, 

Secretary  of  the  Hudson  Navigation  Co. 

This  call  is  handed  or  sent  to  the  secretary,  and  is 
followed  by  his  notice  of  the  meeting.  When  the  by- 
laws provide  that  the  president  shall  call  special  meet- 
ings on  written  request  or  instruction  signed  by  a  pre- 
scribed number  of  directors,  the  foregoing  call  might  be 
modified  to  meet  the  conditions  as  follows: 


Form  43. — Directors'  Instructions.     Special  Meeting. 

To  Mr.  Harry  M.  Moody, 

President  Hudson  Navigation  Co. : 
We,  the  undersigned,  directors  of  the  Hudson  Navigation  Company, 
do  hereby  authorize  and  instruct  you  to  call  a  special  meeting  of  the 
stockholders  of  said  Company,  to  be  held  in  its  office,  No.  270  Broadway, 
New  York,  on  the  15th  day  of  September,  1908,  at  10  o'clock  in  the  fore- 
noon, for  the  purpose  of  taking  action  on  a  proposition  to  sell  the  entire 


CAI,I,S  AND  WAIVERS.  271 

property  and  assets  of  the  Company  and  for  the  transaction  of  any  and 
all  business  necessary  in  connection  therewith. 

New  York  City,  New  York.  John  H.  Goodrich. 

September  1,  1908.  Henry  B.  Merrill. 

Arthur  C.  McCall. 

These  instructions  are  handed  to  the  president,  who 
in  accordance  therewith  issues  a  call  for  the  meeting. 
(See  Forms  40,  41.)  If  Form  41  is  followed,  the  first 
phrase,  "In  accordance  with  the  authority  vested  in  me 
by  the  By-laws  of  this  Company,"  should  be  modified  to 
correspond,  as  "Pursuant  to  written  instructions  of  di- 
rectors of  this  Company." 

Special  meetings  of  stockholders  may  always  be  called 
by  resolution  of  the  board  of  directors. 

Form  44. — Directors'    Resolution.     Special    Meeting    of 
Stockholders. 

Resolution. 


Be  It  Resolved,  That  a  special  meeting  of  the  stockholders  of  this 
Company  be  and  hereby  is  called,  said  meeting  to  be  held  in  the  office 
of  the  Company  at  No.  270  Broadway,  New  York  City,  on  the  15th  day 
of  September,  1908,  at  10  o'clock  in  the  forenoon,  for  the  purpose  of 
considering  and  acting  upon  a  proposition  to  sell  the  entire  property  and 
assets  of  the  Company,  and  for  the  transaction  of  any  and  all  business 
necessary  or  desirable  in  connection  therewith. 

As  the  secretary  is  presumably  present  at'the  meeting 
or  otherwise  has  access  to  the  minutes,  the  mere  passage 
of  such  a  resolution  is  sufficient  notice  to  him  of  the  call^- 
and  he  should  send  out  notice  of  the  meeting. 

It  is  but  seldom  that  the  stockholders  issue  a  request 
or  call  for  a  meeting.  Usually  when  they  do,  it  must,  in 
accordance  with  by-law  requirements,  pass  through  the 
president's  hands.  If  not  so  prescribed,  their  call  may  be 
addressed  to  the  secretary,  in  which  case  the  president's 
only  official  knowledge  of  the  meeting  is  derived  from  the 
notice  sent  him  by  the  secretary.     Occasionally  the  by- 


272  FORMS    REI^ATING    TO    M^E^TINGS. 

laws  authorize  the  stockholders  to  give  direct  notification 
of  the  meeting  by  publication. 

Form  45. — Stockholders'  Request  for  Special  Meeting. 

To  the  President  of  the 

Adams  Machine  Company: 
We,  the  undersigned,  owning  or  controlling  not  less  than  two-thirds 
of  the  entire  voting  stock  of  the  Adams  Machine  Company,  do  hereby 
request  you  to  call  a  special  meeting  of  its  stockholders  to  be  held  in  the 
office  of  the  Company  at  No.  35  Broad  St.,  New  York,  at  3  o'clock  in  the 
afterhoon  on  the  19th  day  of  October,  1908,  for  the  purpose  of  consider- 
ing the  action  of  the  directors  of  this  Company  in  purchasing,  in  opposi- 
tion to  the  expressed  wishes  of  a  majority  of  its  stockholders,  the  ma- 
chine shop  and  equipment  of  the  Harrison  Metal  Working  Company, 
located  at  908  Willoughby  St.,  Brooklyn,  and  to  take  such  action  in  re- 
gard thereto  as  may  seem  necessary  or  desirable  to  the  stockholders  pres- 
ent at  such  meeting,  and  we  request  you  to  have  due  and  timely  notice 
thereof  sent  to  each  stockholder  of  this  Company. 

New  York  City,  N.  Y.,  Name.  Shares  Owned. 

October  1st,  1908.  David    H.    BentlEy 200 

James   J.   Allison 250 

Oliver  P.   Chandler 500 

Stanley  S.  Wood 150 

Henry  M.  Sherrill 300 

Spencer  Harrison 150 

This  stockholders'  request  is  handed  to  the  president, 
who  may  either  endorse  his  call  on  the  request  as  in  the 
form  which  follows,  or  may  issue  a  call  as  in  Forms  40 
and  41. 

Form  46.      President's    Endorsement    of    Stockholders* 
Request. 

To  the  Secretary  of  the 

Adams  Machine  Company  : 

You  are  hereby  instructed  to  give  due  notice  of  a  special  meeting  of 
the  stockholders  of  this  Company  hereby  called  by  me  in  pursuance  of  the 
within  stockholders'  request,  said  meeting  to  be  held  in  the  office  of  the 
Company  at  No.  35  Broad  St.,  New  York  City,  at  3  o'clock  P.  M.  on  the 
19th  day  of  October,  1908,  in  accordance  with  and  for  the  purposes  set 
forth  in  the  said  request. 

New  York  City,  N.  Y.,  John  H.  Harrell, 

October  2,  1908.  President. 

When  the  stockholders'  call  is  directed  to  the  secre- 
tary, its  form  will  be  as  follows: 


CALLS  AND  WAIVERS.  273 

Form  47. — Stockholders'  Call  for  Special  Meeting. 

To  the  Secretary  of  the 

Howard  Woolen  Mills  Co.  : 
We,  the  undersigned,  stockholders  of  the  Howard  Woolen  Mills 
Company  owning  or  controlling  not  less  than  two-thirds  of  its  entire 
voting  stock,  do  hereby  call  a  special  meeting  of  the  stockholders  of  the 
Company  to  be  held  in  its  office  at  No.  45  Main  St.,  Dunkirk,  New  York, 
at  12  o'clock  noon  on  the  15th  day  of  October,  1908,  for  the  purpose  of 
considering  a  proposition  to  amend  the  present  By-laws  so  as  to  restrict 
the  President's  power  to  contract  for  the  Company,  and  of  taking  such 
action  in  regard  thereto  as  may  seem  necessary  or  desirable  to  the  stock- 
holders present  at  such  meeting,  and  we  do  hereby  authorize  and  instruct 
you  to  send  out  notices  of  said  meeting  in  accordance  with  the  terms  of 
this  present  call. 

Dunkirk,  New  York,  NamEs.  Shares   Owned. 

October  5,  1908.  Henry  B.  Clarke 575 

Harry  H.  Howard 1200 

Frank  B.  Johnson 725 

Samuel  Furman 500 

(b)  Special  Meetings  of  Directors. 

Special  meetings  of  directors  are  usually  assembled 
by  means  of  calls  and  waivers,  except  v^here  the  board  is 
large  or  some  of  its  members  are  inaccessible.  The  com- 
mon form  of  call  and  waiver  for  directors'  meetings  is  as 
follows : 

Form  48. — Call   and    Waiver.      Special    Meeting   of    Di- 
rectors. 

Call  and  Waiver. 


Special  Meeting  oe  Directors. 


We,  the  undersigned,  all  the  Directors  of  the  Long  Island  Power 
Company  of  Flushing,  Long  Island,  do  hereby  call  a  special  meeting  of 
the  Board  of  Directors  of  said  Company  to  be  held  in  its  office  at  No. 
285  Duane  St.,  New  York  City,  at  4  o'clock  P.  M.  on  this  21st  day  of 
October,  1908,  for  the  purpose  of  acting  upon  a  proposition  for  the  sale 
of  the  Company|s  Flushing  plant,  and  we  do  hereby  waive  all  statutory 
and  by-law  requirements  as  to  notice  of  time,  place  and  purposes  of  said 
meeting,  and  consent  to  the  transaction  thereat  of  any  and  all  business 
pertaining  to  the  affairs  of  the  Company. 

New  York  City,  N.  Y.,  John   McFerguson. 

October  21,  1908.  Harold  H.  Harding. 

Benton  Creller. 
Howard  H.  Maurice. 
Horace  Evans. 


274  FORMS    REI^ATING    TO    MEJ^TINGS. 

Special  meetings  of  directors  are  sometimes  irregu- 
larly assembled,  as  for  instance  where  all  the  members 
of  a  board  come  together  on  some  informal  notice  or 
without  previous  notice,  and  then  and  there  agree  to 
waive  all  the  usual  formalities  and  hold  an  immediate 
meeting.  Such  meetings,  termed  "consent  meetings," 
are  entirely  legal  and  are  not  uncommon  where  boards  of 
directors  or  executive  committees  are  small  and  easily 
assembled.     (See  §  131.) 

For  such  meetings  a  written  validation  is  not  strictly 
necessary.  The  participation  of  all  the  parties  entitled 
to  be  present,  duly  entered  on  the  minutes  of  the  meet- 
ing, affords  legal  evidence  of  their  consent  thereto  and 
estops  any  subsequent  objections  on  their  part  to  the 
proceedings.  As  a  precautionary  measure,  however,  the 
secretary  should  have  every  member  of  the  board  sign 
the  minutes  of  a  consent  meeting  or,  otherwise,  sign  a 
waiver  of  notice  and  agreement  to  the  meeting  as  given 
below: 

Form  49. — Agreement.     Consent  Meeting  of  Directors. 

HARRISON   CUTLERY   COMPANY. 


Waiver  of  Notice. 


We,  the  undersigned,  all  the  Directors  of  the  Harrison  Cutlery  Com- 
pany, being  now  present,  do  hereby  consent  to  an  immediate  meeting  of 
the  Board  of  Directors  of  said  Company  to  be  held  in  the  office  of  Henry 
H.  McCall,  No.  253  Broadway,  New  York,  at  3  o'clock  P.  M.  this  14th  day 
of  October,  1908,  and  we  hereby  waive  all  requirements  as  to  notice  of 
time,  place  and  purposes  of  such  meeting,  and  agree  to  the  transaction 
thereat  of  any  and  all  business  pertaining  to  the  affairs  of  the  Company. 

Henry  H.  McCall. 

Simon  Frankenstein. 

James  J.  McCall. 

Howard  H.  Frenkel. 

Stanley  T.  Brown. 

The  call  for  a  special  meeting  of  directors  must  be 
signed  as  required  by  the  by-laws — usually  by  the  presi- 


CA1,I,S  AND  WAIVERS.  275 

dent  or  a  certain  number  of  the  directors.     A   form  of 
president's  call  is  as  follows: 

Form  50. — President's  Call.      Special    Meeting    of    Di- 
rectors. 

CORLISS  TYPEWRITER  COMPANY. 
35  Vesey  St.,  New  York. 


October  1st,  1908. 
Mr.  John  H.  Hammond, 

Secretary  Corliss  Typewriter  Co. 
Dear  Sir  : — In  accordance  with  the  authority  vested  in  me  by  the  By- 
laws of  this  Company,  I  hereby  call  a  special  meeting  of  the  Board  of 
Directors  to  be  held  in  the  office  of  the  Company  on  the  15th  day  of  Oc- 
tober, 1908,  at  3  o'clock  in  the  afternoon,  for  the  purpose  of  considering 
and  acting  upon  the  appointment  of  a  Western  selling  agent,  and  for  the 
transaction  of  any  other  business  in  connection  therewith  that  may_  be 
necessary  and  you  are  hereby  authorized  and  instructed  to  send  out  notices 
of  said  meeting  as  required  by  the  By-laws  of  this  Company. 

John  H.  Phillips, 

President. 

This  call  is  handed  to  the  secretary  who,  in  accordance 
with  its  instructions,  follows  it  up  with  the  usual  notice 
of  the  meeting.     (See  Form  60.) 

The  by-laws  frequently  provide  that  special  meetings 
of  the  board  may  be  called  by  a  certain  number  of  the 
directors.  This  call  is  usually  addressed  as  in  the  fol- 
lowing form  and  handed  to  the  secretary  direct. 

Form  51. — Directors'  Call.     Special  Meeting  of  Directors. 

Call  eor  Special  Meeting  of  Directors. 


We,  the  undersigned,  Directors  of  the  Westchester  Brewing  Com- 
pany, hereby  call  a  special  meeting  of  the  Directors  of  said  Company,  to 
be  held  in  its  office.  No.  1575  St.  Nicholas  Ave.,  New  York,  on  the  7th 
day  of  October,  1908,  at  11  o'clock  A.  M.,  for  the  purpose  of  considering 
and  acting  upon  a  proposition  to  purchase  the  plant  and  equipment  of  the 
Harrison  Brewery,  and  for  the  transaction  of  any  and  all  business  neces- 
sary in  connection  therewith,  and  we  hereby  instruct  the  Secretary  of  the 
Company  to  send  out  notices  of  said  special  meeting  in  accordance  with 
the  By-law  requirements  of  this  Company. 

New  York  City,  Henry  C.  Carson. 

October  1,  1908.  Frank  H.  Merrill. 

Samuel  Frenkel. 
To  Mr.  John  H.  HersEy, 

Secretary  Westchester  Brewing  Co. 


CHAPTER  XXIX. 
FORMS  FOR  NOTICES  OF  MEETINGS. 


Every  person  entitled  to  be  present  at  a  corporate 
meeting  is  also  entitled  to  notice  of  such  meeting, .  If  the 
notice  to  be  given  is  prescribed  by  the  charter,  by-laws 
or  statutes,  this  is  always  sufficient,  but  if  not  so  deter- 
mined, "reasonable  notice"  is  then  necessary  and  this  re- 
quires such  notice  as  will  under  ordinary  circumstances 
enable  the  parties  notified  to  attend  the  meeting  without 
great  inconvenience  to  themselves  or  injury  to  their  other 
interests.     (See  §§  80,  97,  129.) 

Notice  of  a  special  meeting  must  accord  as  to  the  time, 
place  and  purposes  thereof  with  the  call  by  which  the 
meeting  is  authorized.  The  authority  under  which  it  is 
issued  should  be  stated  in  the  notice — a  requirement  that 
is  frequently  neglected. 

(a)  Meetings  of  Stockholders. 

Form  52. — Notice.     Special  Meeting  of  Stockholders. 

HUDSON   NAVIGATION   COMPANY. 

New  York  City,  New  York,     \ 
September  1,  1908.         j 
Mr.  Arthur  C.  McCall, 

227  Broadway,  New  York. 
Dear  Sir  : — You  are  hereby  notified  that  pursuant  to  the  call  of  the 
President,  a  special  meeting  of  the  stockholders  of  the  Hudson  Navigation 
Company  will  be  held  in  the  office  of  the  Company,  No.  270  Broadway, 
New  York,  on  the  15th  day  of  September,  1908,  at  lO  o'clock  A.  M.,  for 
the  purpose  of  considering  and  acting  upon  a  proposition  to  sell  the  en- 
tire property  and  assets  of  the  Company,  and  for  the  transaction  of  any 
and  all  business  in  connection  therewith  that  may  properly  come  before 
said  meeting. 

Yours  very  truly, 

Henry  H.  Sheldon, 

Secretary. 

(For  president's  call,  see  Forms  40,  41.) 
276 


NOTICES.  277 

When  notice  of  a  special  meeting  is  to  be  published, 
the  following  form  is  frequently  used.  The  same  form 
also  serves  as  a  notice  to  be  sent  by  mail. 

Form  53.    Publication  Notice.    Special  Meeting  of  Stock- 
holders. 

HUDSON   NAVIGATION   COMPANY. 
270  Broadway,  New  York. 


Notice  is  hereby  given  that  a  special  meeting  of  the  stockholders  of 
the  Hudson  Navigation  Company  will  be  held  in  the  office  of  the  Com- 
pany, No.  270  Broadway,  New  York  City,  on  the  15th  day  of  September, 
1908  at  10  o'clock  in  the  forenoon,  for  the  purpose  of  considering  and 
acting  upon  a  proposition  to  sell  the  entire  property  and  assets  of  the 
Company,  and  for  the  transaction  of  any  and  all  business  in  connection 
therewith  that  may  properly  come  before  said  meeting. 

By  order  of  the  President. 

New  York  City,  N.  Y.,  Henry  H.  Sheldon, 

September  1,  1908.  Secretary. 

The  following  gives  an  excellent  form  of  notice  for  a 
special  meeting  of  stockholders. 

Form    54. — Publication    Notice.      Special    Stockholders* 
Meeting.     (U.  P.  R.  R.  Co.) 

UNION  PACIFIC  RAILROAD  COMPANY. 


Special  Meeting  of  Stockholders. 


120  Broadway,  New  York,   1 
March  26,  1908.       / 
To  the  Stockholders  of  the 

Union  Pacific  Railroad  Company  : 
Notice  is  hereby  given  that  a  special  meeting  of  the  stockholders  of 
Union  Pacific  Railroad  Company  has  been  called  by  the  Board  of  Di- 
rectors to  convene  at  the  office  of  the  Company  at  Salt  Lake  City,  in  the 
State  of  Utah,  on  the  5th  day  of  May,  1908,  at  10  o'clock  A.  M.,  for  the 
purpose  of  considering  and  acting  upon  the  following  propositions,  viz. : 

1.  To  approve  or  ratify  the  sale  to  said  Union  Pacific  Railroad  Com- 
pany of  the  railroad  and  branches,  constructed  or  to  be  constructed,,  of 
The  Leavenworth,  Kansas  and  Western  Railway  Company,  together  with 
all  the  property  rights,  privileges,  and  franchises  thereto  pertaining,  and 
all  other  property  of  the  Company  last  named ; 

2.  To  approve  or  ratify  the  sale  to  said  Union  Pacific  Railroad  Com- 
pany of  the  railroad  and  branches,  constructed  or  to  be  constructed,  of 
The  Topeka  and  Northwestern  Railroad  Company,  together  with  all  the 
property,  rights,  privileges,  and  franchises  thereto  pertaining,  and  all  other 
property  of  the  Company  last  named ; 

3.  To  authorize  or  approve  an  issue  of  bonds  to  be  secured  by  a  mort- 


278  IfORMS    REI.ATING    TO    MEETINGS. 

gage  of  a  portion  of  said  Union  Pacific  Railroad  Company's  lines  of  rail- 
road, together  with  the  appurtenances,  including  the  lines  of  railroad  pro- 
posed to  be  purchased  as  aforesaid. 

The  books  for  the  transfer  of  the  stock  (both  preferred  and  common) 
will  be  closed  for  the  purpose  of  the  meeting  at  12  o'clock  noon,  on  the 
11th  day  of  April,  1908,  and  will  be  reopened  at  10  o'clock  A.  M.,  on  the 
6th  day  of  May,  1908. 

By  order  of  the  Board  of  Directors. 

Ai.Ex.  Millar, 

Secretary. 

Notice  of  the  annual  meeting  must  be  sent  out  in  ac- 
cordance with  the  requirements  of  the  by-laws.  (See  § 
8o.) 

Form  55. — Notice.     Annual  Meeting. 

HARMON  PUBLISHING  COMPANY. 
765  Main  St.,  Dover,  Delaware. 


October  1,  1908. 
Mr.  Francis  H.  Jamieson, 

336  Ocean  Ave.,  Atlantic  City,  N.  J.: 
Dear  Sir  : — You  are  hereby  notified  that  the  annual  meeting  of  the 
stockholders  of  the  Harmon  Publishing  Company  will  be  held  at  the  office 
of  the  Company  in  Dover,  Delaware,  on  Tuesday,  October  13th,  1908,  at  10 
o'clock  A.  M.,  for  the  election  of  five  Directors  for  the  ensuing  year  and 
for  the  transaction  of  such  other  business  as  may  come  before  the  meeting. 
The  stock  transfer  books  of  the  Company  will  be  closed  at  3  o'clock 
P.  M.,  October  5th,  1908,  and  remain  closed  until  10  o'clock  A.  M.,  Oc- 
tober 14th,  1908. 

Respectfully, 

James  H.  Howard, 

Secretary. 

The  following  is  the  form  of  mailing  notice  employed 
by  the  United  States  Steel  Corporation: 

Form  56. — Notice.       Annual    Meeting.       (U.    S.    Steel 
Corp.) 

UNITED  STATES  STEEL  CORPORATION. 


Notice  oe  Seventh  Annual  Meeting. 


Notice  hereby  is  given  that  the  Seventh  Annual  Meeting  of  the  stock- 
holders of  the  United  States  Steel  Corporation  will  be  held  at  the  principal 
office  of  the  Corporation,  at  the  Hudson  Trust  Company,  No.  51  Newark 
Street,  in  the  City  of  Hoboken,  County  of  Hudson,  New  Jersey,  on  Mon- 


NOTICES.  279 

day,  the  twentieth  day  of  April,  1908,  at  12  o'clock  noon,  for  the  trans- 
action of  any  and  all  business  that  may  come  before  the  meeting,  including 
considering  and  voting  upon  the  approval  and  ratification  of  all  purchases, 
contracts,  acts,  proceedings,  elections  and  appointments  by  the  Board  of 
Directors  or  the  Finance  Committee  since  the  Sixth  Annual  Meeting  of 
the  stockholders  of  the  Corporation  on  April  15,  1907;  the  authorization 
of  the  purchase  of  the  properties  belonging  to  the  Tennessee  Coal,  Iron 
and  Railroad  Company;  and  all  matters  referred  to  in  the  Sixth  Annual 
Report  to  Stockholders  and  in  the  proceedings  of  the  Board  of  Directors, 
which  until  the  meeting  will  be  open  to  examination  by  stockholders  of 
record  during  business  hours  at  the  New  York  Office  of  the  Corporation, 
71  Broadway;  the  election  of  eight  Directors  to  hold  office  for  three  years; 
and  the  election  of  independent  auditors  to  audit  the  books  and  accounts 
of  the  Corporation  at  the  close  of  the  fiscal  year. 

The  stock  transfer  books  will  be  closed  at  the  close  of  business  on 
Monday,  the  16th  day  of  March,  1908,  and  will  be  re-opened  at  10  o'clock 
in  the  morning  of  Tuesday,  April  21,  1908. 

Richard  Trimble, 

Secretary. 
HoBOKEN,  New  Jersey,    1 


February  9,  1908. 


As  the  stock  of  the  Corporation  should  be  represented  as  fully  as  pos- 
sible at  the  annual  meeting,  Stockholders  who  do  not  expect  to  attend  in 
person,  and  who  wish  to  vote  as  therein  indicated,  may  sign  the  enclosed 
proxy  and  return  the  same  in  the  accompanying  envelope  addressed  to 
United  States  Steel  Corporation,  Transfer  Office,  71  Broadway,  New 
York. 

In  view  of  the  very  considerable  amount  of  detail  necessary  to  pre- 
pare for  this  meeting,  it  is  desired  that  a  proxy  shall  be  returned  at  as 
early  a  date  as  possible  by  every  Stockholder. 

A  copy  of  the  Sixth  Annual  Report  will  be  mailed  to  each  Stock- 
holder of  record  under  a  separate  cover  and  will  be  submitted  at  the 
meeting. 

Richard  Trimble, 

Secretary. 

(For  proxy  accompanying  this  notice,  see  Form  68.) 

In  a  number  of  states  the  statutes  require  the  publica- 
tion of  the  notice  of  the  annual  meeting.  The  following 
forms  are  suitable  for  this  purpose.  Form  55  may  also 
be  easily  modified  to  serve  as  a  publication  notice: 

Form  57. — Publication  Notice.     Annual  Meeting. 

HARMON  PUBLISHING  COMPANY. 
765  Main  St.,  Dover,  Delaware. 


October  1,  1908. 

Notice  is  hereby  given  that  the  annual  meeting  of  the  stookhoKlers 

of  the  Harmon  Publishing  Company  will  be  held  at  the  office  of  the  Com- 


280  FORMS    RIJIvATING    TO    MEETINGS. 

pany  at  765  Main  St.,  Dover,  Delaware,  October  13,  1908,  at  10  o'clock 
A.  M.,  for  the  election  of  five  Directors  and  for  the  transaction  of  such 
other  business  as  may  be  brought  before  said  meeting. 

The  stock  transfer  books  of  the  Company  will  be  closed  at  3  o'clock 
P.  M.,  October  5,  1908,  and  remain  closed  until  10  o'clock  A.  M.,  October 
14,  1908. 

James  H.  Howard, 

Secretary. 


Form  58. — Publication  Notice.     Annual  Meeting. 

NEW  YORK  LOAN  AND  IMPROVEMENT  CO. 

New  York,  June  12,  1908. 
The  Annual  Meeting  of  the  Stockholders  of  the  New  York  Loan  and 
Improvement  Company,  for  the  election  of  nine  Directors,  and  two  in- 
spectors of  election  and  the  transaction  of  such  other  business  as  may 
properly  come  before  the  meeting,  will  be  held  at  the  office  of  the  com- 
pany, No.  51  Wall  Street,  New  York  City,  on  Tuesday,  July  14,  at  12 
o'clock  noon.    The  polls  will  be  open  from  12  M.  to  1  P.  M. 

F.  S.  Rollins, 

Secretary. 

In  the  notice  which  follows  a  portion  of  the  purposes 
are  omitted  to  save  space. 

Form  59. — Publication  Notice.     Annual  Meeting.     (U.  P. 
R.  R.  Co.) 

UNION  PACIFIC  RAILROAD  COMPANY. 
Annual  Meeting. 

120  Broadway,  New  York,      \ 
August  13,  1908.  J 

The  Annual  Meeting  of  the  stockholders  of  Union  Pacific  Railroad 
Company  will  be  held  at  the  office  of  the  Company  in  Salt  Lake  City, 
Utah,  on  Tuesday,  October  13,  1908,  at  twelve  o'clock  noon,  for  the  fol- 
lowing purposes,  viz.:  (1)  To  elect  fifteen  Directors;  (2)  To  approve 
the  form,  and  to  authorize  and  direct  the  execution  and  delivery  to  The 
Equitable  Trust  Company  of  New  York,  as  Trustee  of  the  Company's 
First  Lien  and  Refunding  Mortgage,  dated  June  1,  1908,  of  an  indenture 
for  ******  and  (4)  To  transact  all  such  other 
business  as  may  legally  come  before  the  meeting,  including  the  approval 
and  ratification  of  all  action  of  the  Board  of  Directors  and  of  the  Exe- 
cutive Committee  since  the  last  Annual  Meeting  of  the  stockholders  of 
the  Company. 

For  the  purposes  of  the  meeting  the  books  for  the  transfer  of  stock, 
both  preferred  and  common,  will  be  closed  at  3  o'clock  P.  M.  on  Monday, 
September  14,  1908,  and  will  be  reopened  at  10  o'clock  A.  M.  on  Wednes- 
day, October  14,  1908. 

Alex.  Millar, 

Secretary. 


NOTICES.  281 

(b)  Meetings  of  Directors. 

Form  60. — Notice.     Special  Meeting  of  Directors. 

HYDRO-CARBON  STEEL  COMPANY. 
134  West  23rd  St.,  New  York  City. 


September  15,  1908. 
Mr.  Walter  H.  Sinclair, 

Montclair,  New  Jersey: 
Dear  Sir  : — You  are  hereby  notified  that  pursuant  to  call  of  the  Presi- 
dent, a  special  meeting  of  the  Board  of  Directors  of  this  Company  will  be 
held  in  its  office  at  3  o'clock  P.  M.  on  the  18th  day  of  September,  1908,  to 
act  upon  a  proposition  to  purchase  the  plant  of  the  Scranton  Foundry 
Company  and  to  transact  such  other  business  in  connection  therewith  as 
may  be  necessary  or  desirable. 

Respectfully, 

Milton  H.  Sanderson, 

Secretary. 

This  notice  must  be  sent  to  every  member  of  the 
board.  The  time,  place  and  purpose  of  the  meeting  must 
be  stated,  and,  unless  every  member  of  the  board  is  pres- 
ent and  agrees  thereto,  no  business  may  be  transacted  at 
the  meeting  save  that  so  specified. 

Form  61. — Notice.     Regular  Meeting  of  Directors. 

HYDRO-CARBON  STEEL  COMPANY. 
134  West  23rd  St.,  New  York  City. 


October  1,  1908. 
Mr.  Walter  H.  Sinclair, 

Montclair,  New  Jersey: 
Dear  Sir  : — You  are  hereby  notified  that  the  regular  quarterly  meet- 
ing of  the  Board  of  Directors  of  the  Hydro-Carbon  Steel  Company  will 
be  held  in  the  office  of  the  Company,  No.  134  West  23rd  St.,  New  York,  on 
Tuesday,  October  13,  1908,  at  3  o'clock  P.  M. 

Respectfully, 

Milton  H.  Sanderson, 

Secretary. 

It  is  but  rarely  that  publication  notices  are  used  in  as- 
sembling directors'  meetings.  Either  of  the  foregoing 
notices  might  be  readily  modified,  if  desired,  to  serve  as  a 
publication  notice.  Consent  meetings,  from  their  nature, 
neither  permit  nor  require  any  formal  notice.    (See  §  13T.') 


CHAPTER  XXX. 
FORMS  OF  PROXIES. 


A  proxy  is  merely  a  special  power  of  attorney  (See  § 
85)  and  may  convey  any  authority  the  maker  desires  up 
to  the  limit  of  his  own. 

The  powers  conferred  by  a  proxy  are  limited  strictly 
to  those  specified.  Thus  a  proxy  to  vote  on  a  proposed 
amendment  of  the  charter  at  a  certain  meeting  would  not 
authorize  the  holder  to  also  vote  upon  a  proposed  amend- 
ment of  the  by-laws  though  considered  at  the  same  meet- 
ing. 

The  time  for  which  a  proxy  runs  is  also  governed 
strictly  by  the  provisions  of  the  instrument  unless  sooner 
terminated  by  statutory  or  by-law  provisions  (See  §  85), 
or  by  the  death  of  the  maker,  or  by  the  sale  of  his  stock, 
or  by  his  formal  revocation  filed  with  the  secretary,  or, 
for  the  meetings  at  which  he  appears,  by  the  presence  and 
participation  thereat  of  the  maker.^  A  proxy  given  for  a 
particular  meeting  holds  good  for  any  meeting  adjourned 
therefrom,  whether  so  specified  or  not. 

"A  proxy  should  be  in  writing,  but  it  need  not  be  in 
any  particular  form;  it  need  not  be  acknowledged  or  ap- 
proved, but  it  must  be  in  such  a  shape  as  reasonably  to 
satisfy  the  inspectors  of  election  of  its  genuineness  and 
validity."^     To  meet  this  requirement  the  proxy  should  be 

>  Chapman  v.  Bates,  61  N.  J.  Eq.  658  (1900);  Commonwealth  v.  Patterson,  158 
Pa.  St.  476  (1893). 

»  2  Cook  on  Corp.,  §  610. 

282 


PROXIES.  283 

signed  and  sealed  by  the  maker  and  be  witnessed  by  at 
least  one  person,  but  does  not  ordinarily  require  acknowl- 
edgment. It  may  cover  all  or  any  part  of  the  stock  owned 
by  an  individual,  and  two  or  more  proxies  may  be  given 
by  a  single  stockholder,  each  proxy  covering  a  part  of  his 
holding.    (See  Form  66.) 

A  proxy  may  be  revoked  by  the  maker  at  any  time 
even  though  by  its  terms  the  proxy  is  irrevocable.  The 
only  exception  to  this  rule  is  where  occasionally  a  proxy  is 
coupled  with  an  interest  in  the  stock  on  which  the  proxy 
is  given.  The  revocation  of  a  proxy  should  be  in  writing 
and  be  filed  with  the  secretary  of  the  meeting.  The  mere 
presence  of  the  owner  of  the  stock  at  any  meeting,  with 
the  express  intention  of  voting  his  stock  thereat,  has  the 
effect  of  revoking  for  that  meeting  all  outstanding  proxies 
given  by  him.  If  a  proxy  is  issued  while  a  prior  proxy 
for  the  same  stock  is  outstanding,  a  revocation  of  the 
first  proxy  should  be  incorporated  in  the  second.  Should 
this  not  be  done,  the  more  recent  proxy  will  on  presenta- 
tion revoke  the  first,  but  the  absence  of  formal  revocation 
is  a  suspicious  circumstance,  liable  to  provoke  inquiry  and 
cause  trouble. 

Notices  of  the  annual  meetings  of  the  larger  corpora- 
tions are  usually  accompanied  by  proxy  forms,  which 
stockholders  unable  to  be  present  at  the  meeting  in  per^ 
son  are  requested  to  sign  and  send  in  to  the  corporate 
officials.  (See  Form  56.)  In  this  way  a  quorum  is  often 
secured  when  otherwise  it  would  fail.  The  plan  is  some- 
times utilized  with  much  effect  for  the  purpose  of  secur- 
ing a  majority  for  some  measure  favored  by  the  directors 
of  the  company. 

Proxies  sent  with  notices  of  meetings  sometimes  name 
the  parties  to  act  (See  Form  68)  but  are  frequently  sent 
out  without,  and  are  then  usually  returned  signed  in  blank; 
i.  e.,  while  duly  signed  and  witnessed,  the  name  of  the 


284  FORMS    RElvATiNG    TO    MEETINGS. 

person  who  is  to  act  as  proxy  is  omitted.  The  name  of 
the  secretary  or  someone  else  present  at  the  meeting  is 
then  inserted  and  the  instrument  so  completed  is  legally 
effective. 

Proxies  signed  in  blank  are  usually  employed  in  any 
case  where  the  name  of  the  party  to  act  has  not  been 
definitely  decided  upon  or  where  it  is  immaterial.  In  this 
shape  the  proxy  can  be  used  by  anyone  into  whose  hands 
it  may  come.  When  once  completed,  however,  by  the 
insertion  of  the  name  of  the  party  to  act,  it  can  be  used 
only  by  the  specified  party,  nor  can  this  party  authorize 
anyone  else  to  vote  the  stock  covered  by  the  proxy  un- 
less the  proxy  itself  distinctly  confers  upon  him  full  rights 
of  substitution. 

Directors  cannot  give  proxies  authorizing  others  to 
represent  and  vote  for  them  at  directors'  meetings.  The 
directors  occupy  a  position  of  trust  and  they  cannot  as  in- 
dividuals delegate  the  trust  vested  in  them  to  others. 

When  proxies  are  to  be  used  they  are  filed  with  the 
secretary  of  the  meeting.  If  the  holder  desires  to  retain 
his  original  proxy,  he  may,  after  exhibiting  the  original, 
file  a  certified  copy  with  the  secretary  of  the  meeting. 

Form  62. — Proxy.     Simple  Form. 

Proxy. 


I  hereby  appoint  George  H.  Brewer  my  proxy  with  full  authority  to 
vote  for  me  and  in  my  place  at  any  and  all  stockholders'  meetings  of  the 
Brewer  Plow  Company. 

Witness  my  hand  and  seal  this  7th  day  of  October,  1908. 

Harold  J.  McCormick.     (L.  S.) 
Witnessed  by 

Henry  F.  Simmons. 

This  proxy  is  under  most  circumstances  legally  sui^- 
cient  and  the  powers  it  conveys  are  broad.  A  more  formal 
proxy  is,  however,  desirable  when  important  matters  are 
to  be  considered.  The  proxy  which  follows  is  still  simple 
as  to  form  but  more  specific  in  its  terms. 


PROXIES.  285 

Form  63. — Proxy.     Unlimited. 

Proxy. 


I,  the  undersigned,  do  hereby  constitute  and  appoint  George  J.  Mc- 
Clelland my  true  and  lawful  attorney  to  represent  me  at  any  and  all  meet- 
ings of  the  stockholders  of  the  Carney  Falls  Power  Company,  and  for 
me  and  in  my  name  and  stead  to  vote  thereat  upon  the  stock  standing  in 
my  name  on  the  books  of  said  Company  at  the  times  of  said  meetings, 
and  I  hereby  grant  my  said  attorney  all  the  powers  that  I  should  my- 
self possess  if  personally  present  thereat. 

Witness  my  signature  and  seal  this  1st  day  of  August,  1908. 

Harold  B.  McClelland.     (L.  S.) 
In  the  presence  of 

Alphonse  H,  Duret. 

At  the  expiration  of  the  specified  term  the  following 
proxy  becomes  null  and  void  without  formal  revocation 
or  other  action  on  the  part  of  the  maker. 


Form  64. — Proxy.     Time  Limited. 

Proxy. 


I,  the  undersigned,  do  hereby  constitute  and  appoint  Henry  M.  Wil- 
liams my  true  and  lawful  attorney  to  represent  me  at  all  meetings  of  the 
stockholders  of  the  Carney  Falls  Power  Company  held  on  or  prior  to  the 
15th  day  of  June,  1909,  and  do  hereby  authorize  and  empower  him  for 
me  and  in  my  name  and  stead  to  vote  at  such  meetings  upon  the  stock 
now  standing  in  my  name  on  the  books  of  said  Company,  and  I  hereby 
grant  my  said  attorney  all  the  power  at  said  meetings  that  I  should  my- 
self possess  if  personally  present  thereat. 

Witness  my  signature  and  seal  this  15th  day  of  August,  1908. 

Samuel  B.  Fremont.     (L.  S.) 
In  the  presence  of 
J.  J.  Masterson. 

It  should  be  noted  that  the  wording  of  the  foregoing 
proxy  authorizes  the  appointee  to  vote  only  upon  the  stock 
"now  standing  in  my  name."  Should  the  maker  acquire 
additional  stock  of  the  company  after  the  date  of  this 
proxy,  but  during  its  life,  such  additional  stock  is  not 
covered  by  the  proxy.  In  this  the  proxy  differs  from  the 
proxy  of  Form  63  which  covers  all  stock  owned  by  the 
maker  "at  the  times  of  said  meetings," 


286  FORMS    KBLATING    TO    MEJEJTINGS. 

Form  65. — Proxy.     Particular  Meeting. 

Proxy. 


Know  All  Men  by  These  Presents  : 

That  I,  the  undersigned,  do  hereby  constitute  and  appoint  Kenneth 
J.  Johnson  my  true  and  lawful  attorney  with  full  powers  of  substitution 
and  revocation,  to  represent  me  at  the  special  meeting  of  stockholders  of 
the  Graham  Navigation  Company,  to  be  held  on  the  19th  day  of  October, 
1908,  at  3  o'clock  P.  M.,  and  do  hereby  authorize  and  empower  him  to 
vote  at  said  meeting  and  at  any  adjournment  thereof,  for  me  and  in  my 
name  and  stead,  upon  the  stock  then  standing  in  my  name  on  the  books  of 
said  Company,  and  I  hereby  grant  my  said  attorney  all  the  powers  that  I 
should  possess  if  personally  present  at  said  meeting. 

Witness  my  signature  and  seal  this  1st  day  of  October,  1908. 

MelvEr  M.  McKim.     (L.  S.) 
In  the  presence  of 

Henry  P.  Swenton. 

Outside  its  limitation  as  to  time,  the  preceding  proxy- 
is  broad.  It  not  only  covers  all  stock  held  in  the  name  of 
the  maker  at  the  time  of  meeting  and  empowers  the  ap- 
pointee to  act  as  fully  and  with  the  same  authority  as  the 
owner  might  himself,  but  also  empowers  him  to  give  and 
revoke  proxies  conveying  similar  voting  powers  to  others. 
If  it  is  not  desired  to  convey  these  latter  powers,  the  words 
"with  full  power  of  substitution  and  revocation"  should  be 
omitted. 

If  all  the  stock  covered  by  a  proxy  is  disposed  of  before 
the  date  of  meeting,  such  proxy  is  thereby  nullified.  If 
part  of  the  stock  is  sold,  the  proxy  still  holds  for  the  re- 
maining stock.  If  a  proxy  specifies  the  number  of  shares 
of  stock  to  be  voted  upon,  such  proxy  is  good  for  the  num- 
ber of  shares  standing  in  the  maker's  name  up  to  the 
specified  number. 

Form  66. — Proxy.    Limited  as  to  Stock. 

Proxy. 


I,  the  undersigned,  do  hereby  nominate  and  appoint  John  H.  Mc- 
Cracken  my  true  and  lawful  attorney,  for  me  and  in  my  name,  place  and 
stead  to  vote  at  all  stockholders'  meetings  of  the  Fowler  Watch  Com- 
pany upon  Twenty-five  Shares  of  the  stock  of  said  Company  standing  in 
my  name,  and  I  hereby  grant  my  said  attorney  all  the  powers  as  to  said 


PROXIES.  287 

Twenty-five  Shares  of  stock  that  I  would  myself  possess  if  personally 
present  at  such  meetings. 

Witness  my  signature  and  seal  this  10th  day  of  October,  1908. 

Francis  P.  Sterling. 
In  the  presence  of 
Harry  H.  French. 

The  preceding  form  may  be  used  when  but  a  portion 
of  the  stock  owned  by  a  stockholder  is  to  be  represented 
by  his  proxy.  A  single  stockholder  may  give  several  such 
proxies  to  cover  his  entire  holding  of  stock,  the  object  be- 
ing to  admit  several  representatives  to  the  proceedings  of 
the  meeting. 

Form  67. — Proxy.     Annual  Meeting.     Formal. 

Proxy. 


Know  All  Men  by  These  Presents  : 

That  we,  the  undersigned,  stockholders  of  the  Carney  Falls  Power 
Company,  do  hereby  constitute  and  appoint  J.  Adam  McCall  our  true  and 
lawful  attorney  with  full  power  of  substitution  and  revocation,  for  us  and 
in  our  names,  place  and  stead  to  vote  upon  the  stock  then  standing  in  our 
respective  names  upon  the  books  of  said  Company,  at  the  annual  meeting 
of  the  stockholders  thereof  to  be  held  in  the  office  of  the  Company,  425 
Fifth  Ave.,  New  York  City,  January  15,  1909,  at  10  o'clock  in  the  fore- 
noon, and  at  any  meeting  postponed  or  adjourned  therefrom,  hereby 
granting  to  our  said  attorney  full  power  and  authority  to  act  for  us  and 
in  our  names  and  stead  to  vote  thereat  upon  our  said  stock  in  the  elec- 
tion of  directors  and  in  the  transaction  of  such  other  business  as  may  be 
brought  before  the  said  meeting,  all  as  fully  as  we  might  or  could  do  if 
personally  present,  and  we  hereby  ratify  and  confirm  all  that  our  said  at- 
torney or  his  substitute  shall  lawfully  do  at  such  meeting  in  our  names, 
place  and  stead. 

In  Witness  Whereof,  we  have  hereunto  affixed  our  respec- 
tive signatures  and  seals  this  2nd  day  of  November,  1908. 
S.   S.   FoLSOM.  (L.  S.) 

Henry  M.   Cleveland.      (L.  S.) 
J.  B.  McLain.  (L.  S.) 

Sargent  McLain.  (L.  S.) 

In  the  presence  of 

William.  J.  Hammond 
as  to  S.  S.  Folsom 
and  Henry  M.  Cleveland. 
Jerry  T.  McAllister 
as  to  J.  B.  McLain 
and  Sargent  McLain. 

The  preceding  proxy  does  not  convey  any  greater  or 
more  complete  powers  than  the  shorter  forms  heretofore 


288  FORMS    RElvATlNG    TO    MEETINGS. 

considered  but  is  more  specific  and  conventional  and 
therefore  preferable  when  matters  of  importance  are  to  be 
considered  and  acted  upon. 

The  following  proxy  for  an  annual  meeting  is  also 
formal  and  is  in  addition  specific;  i.  e.,  it  directs  that  the 
vote  of  the  proxy  shall  be  cast  in  favor  of  certain  specified 
measures.  The  proxy  is  also  peculiar  in  the  fact  that  five 
attorneys  are  appointed  thereby,  all  to  act  through  a  ma- 
jority of  those  present  at  the  meeting. 

Form  68. — Proxy.     Annual  Meeting.     (U.  S.  Steel  Corp.) 

UNITED  STATES  STEEL  CORPORATION. 
Proxy  for  Seventh  Annual  Meeting  of  April  20,  1908. 


Know  all  Men  by  these  Presents,  That  the  undersigned  Stock- 
holder in  United  States  Steel  Corporation,  do  hereby  constitute  and 
appoint  J.  P.  Morgan,  H.  C.  Frick,  E.  H.  Gary,  N.  B.  Ream  and  N. 
Thayer,  and  each,  or  any  of  them,  true  and  lawful  attorney  or  attorneys, 
agent  or  agents  and  proxy  or  proxies  of  the  undersigned,  with  power  of 
substitution,  for  and  in  the  name,  place  and  stead  of  the  undersigned,  to 
vote  upon  all  Common  Stock  and  all  Preferred  Stock,  or  either,  held  or 
owned  by  the  undersigned,  at  the  Seventh  Annual  Meeting  of  the  Stock- 
holders of  the  United  States  Steel  Corporation,  to  be  held  at  the  office 
of  said  Corporation  at  Hoboken,  New  Jersey,  on  Monday,  the  twentieth 
day  of  April,  1908,  and  at  any  and  all  adjournments  thereof,  for  the 
transaction  of  any  and  all  business  that  may  come  before  the  meeting,  in- 
cluding considering  and  voting  upon  the  approval  and  ratification  of  all 
purchases,  contracts,  acts,  proceedings,  elections  and  appointments  by  the 
Board  of  Directors  or  by  the  Finance  Committee  since  the  sixth  annual 
meeting  of  the  Corporation,  the  authorization  of  the  purchase  of  the  prop- 
erties belonging  to  the  Tennessee  Coal,  Iron  and  Railroad  Company,  and 
all  matters  referred  to  in  the  notice  of  this  meeting  and  in  the  Sixth  An- 
nual Report  to  Stockholders  and  in  the  minutes  of  the  meetings  of  the 
Board  of  Directors  and  of  the  Finance  Committee,  the  election  of  eight 
Directors  to  hold  office  for  three  years,  the  election  of  independent  auditors, 
and  upon  any  and  all  matters  that  may  come  before  the  meeting,  according 
to  the  number  of  votes  the  undersigned  would  be  entitled  to  vote  if  then 
personally  present ;  hereby  revoking  any  proxy  or  proxies  heretofore  given 
to  vote  upon  such  stock,  and  ratifying  and  confirming  all  that  said  attor- 
neys, agents,  and  proxies  may  do  by  virtue  hereof.  A  majority  of  all  or 
of  any  of  said  attorneys,  agents  and  proxies  who  shall  be  present  and  shall 
act  at  the  meeting  (or  if  only  one  shall  be  present  and  act,  then  that  one) 
shall  have,  and  may  exercise,  all  of  the  powers  of  all  of  said  attorneys, 
agents  and  proxies  hereunder;  and  they  are  instructed  to  vote  in  favor 
of  the  authorization  of  the  purchase  above  mentioned  and  the  approval 
and  ratification  of  each  and  every  of  said  purchases,  contracts,  acts,  pro- 
ceedings, elections  and  appointments. 

Witness         hand         and  seal         this  day  of        ,  1908. 

Witness  :  (seal.) 

Address 


PROXIES.  289 

A  simpler  form  of  specific  proxy  limiting  the  acts  of 
the  proxy  to  a  single  object,  is  as  follows: 

Form  69. — Proxy.     Specific  Action. 

Proxy. 


Know  All  Men  by  These  Presents  : 

That  I,  the  undersigned,  do  hereby  constitute  and  appoint  Wilson  H. 
McCall  my  true  and  lawful  attorney  to  attend  a  special  meeting  of  the 
stockholders  of  the  American  Desk  Company  to  be  held  at  the  office  of 
said  Company,  No.  35  Fulton  St.,  New  York,  at  10  o'clock  A.  M.  on  the 
13th  day  of  October,  1908,  and  for  me  and  in  my  name,  place  and  stead 
to  cast  thereat  the  number  of  votes  to  which  I  may  be  entitled  by  virtue 
of  the  stock  then  standing  in  my  name  on  the  books  of  the  said  Com- 
pany, against  any  and  all  propositions  that  may  be  presented  to  said 
meeting  for  the  consolidation  of  the  said  American  Desk  Company  with 
the  Desk  Company  of  New  Jersey,  and  I  do  hereby  grant  my  said  attorney 
full  power  and  authority  to  cast  my  said  votes  as  herein  set  forth,  and  do 
hereby  ratify  and  confirm  my  said  attorney's  action  in  so  doing,  ex- 
pressly denying,  however,  to  my  said  attorney,  all  right,  power  and  au- 
thority to  vote  in  my  behalf  on  any  other  matter  or  matters  coming  up  at 
said  meeting. 

In  Witness  Whereof,  I  have  hereunto  affixed  my  signature 
and  seal  this  3rd  day  of  October,  1908. 

Franklin  S.  Sibley.     (L.  S.) 
Signed,  sealed  and  delivered 
in  the  presence  of 

Hamilton  W.  Maxwell. 

It  frequently  happens  that  stock  of  one  corporation  is 
the  property  of  another  corporation.  Such  stock  may  be 
held  in  the  name  of  the  owner  corporation,  or  in  the  name 
of  its  treasurer  or  other  trustee  for  the  corporation.  If 
the  stock  stands  in  the  name  of  the  treasurer  or  other 
trustee,  the  party  in  whose  name  it  is  held  is  as  a  matter 
of  course  entitled  to  vote  the  stock,  or  give  a  proxy.  Usu- 
ally such  proxy  is  given  in  accordance  with  the  instruc- 
tions of  the  corporation  for  whose  benefit  the  stock  is  held. 
A  form  of  trustee's  proxy  is  as  follows: 

Form  70. — Proxy.     Trustee's. 

Proxy. 

Know  All  Men  by  These  Presents  : 

That  I,  William  H.  Parker,  holding  in  my  name  as  Trustee  for  the 
Steel   Company  of   the   Republic,   Five   Hundred   Shares   of   the   Capital 


290  r'ORMS    RELATING    TO    MEETINGS. 

Stock  of  the  Howard  Welding  Company  of  New  York  City,  do  as  said 
Trustee  fully  authorized  thereto,  hereby  constitute  and  appoint  Frederick 
W.  Morton  of  New  York  City  my  true  and  lawful  attorney  to  represent 
said  stock  at  the  annual  meeting  of  the  stockholders  of  the  said  Howard 
Welding  Company,  to  be  held  in  the  office  of  said  Company,  No.  22  Broad 
St.,  New  York  City,  on  the  10th  day  of  October,  1908,  at  10  o'clock  in 
the  forenoon,  and  for  me  and  in  my  stead  to  vote  thereat  upon  the  said 
Five  Hundred  Shares  of  stock  belonging  to  the  said  Steel  Company  of 
the  Republic,  and  I  hereby  grant  the  said  Frederick  W.  Morton  full  power 
and  authority  to  represent  the  said  stock  at  the  said  meeting  and  to  vote 
thereon  in  the  election  of  directors  and  in  the  transaction  of  any  other 
business  that  may  be  brought  before  the  said  meeting,  or  before  any 
meeting  adjourned  therefrom,  all  as  fully  as  I,  as  said  Trustee,  might  do 
if  I  were  personally  present  thereat,  and  I  hereby  ratify  and  confirm  all 
that  the  said  Frederick  W.  Morton  shall  lawfully  do  at  said  meeting  by 
virtue  of  this  present  authority. 

In  Witness  Whereof,  I  have  hereunto  affixed  my  signature 
and  seal  as  Trustee  for  the  said  Steel  Company  of  the 
Republic  in  the  City  of  Philadelphia  on  this  3rd  day  of 
October,  1908. 

William   H.   Parker,  (L.  S.) 

Trustee  for  the 
Steel  Company  of  the  Republic. 
In  the  presence  of 
Fred  W.  Morgan. 

If  the  corporate  stock  is  held  in  the  name  of  the  treas- 
urer or  secretary,  the  general  form  of  proxy  is  similar  to 
that  given.  It  is,  however,  signed  with  the  maker's  offi- 
cial title,  as  "Freeman  H,  Duncan,  Treasurer,"  and  in  the 
body  of  the  proxy  a  statement  should  appear  that  the 
stock  held  by  him  is  in  trust  for  his  company. 

If  the  corporate  stock  is  held  in  the  name  of  the  owner 
corporation,  the  proxy  might  be  given  under  the  corporate 
name  as  in  the  following  general  form. 

Form  71. — Corporate  Proxy. 

Proxy. 


Know  All  Men  by  These  Presents  : 

That  the  Steel  Company  of  the  Republic,  a  corporation  organized  un- 
der the  laws  of  the  State  of  Pennsylvania,  owning  and  holding  Five  Hun- 
dred Shares  of  the  Capital  Stock  of  the  Howard  Welding  Company  of 
New  York  City,  does  hereby  constitute  and  appoint  Frederick  W.  Morton 
of  New  York  City  its  true  and  lawful  attorney  to  attend  the  annual  meet- 
ing of  the  aforesaid  Howard  Welding  Company  to  be  held  in  its  office. 
No.  22  Broad  St.,  New  York,  on  October  10th,  1908,  at  10  o'clock  in  the 
forenoon,  and  thereat  for  this  Company  and  in  its  name,  place  and  stead 
to  vote  upon  the  said  Five  Hundred  Shares  of  stock,  and  to  do  all  such 


PROXIES.  291 

other  things  competent  to  a  stockholder  of  said  Howard  Welding  Com- 
pany, as  may  in  his  judgment  be  necessary  or  advantageous  for  the  in- 
terests of  this  Company,  and  to  that  end  the  said  Steel  Company  of  the 
Republic  does  hereby  grant  to  its  said  attorney  for  said  meeting,  and  for 
any  meetings  adjourned  therefrom,  any  and  all  powers  belonging  to  or 
pertaining  to  this  Company  as  a  stockholder  of  the  aforesaid  Howard 
Welding  Company,  hereby  ratifying  and  confirming  all  that  its  said  at- 
torney may  lawfully  do  at  said  meeting  in  its  name,  place  and  stead. 

In  Witness  Whereof,  the  President  and  Secretary  of  the 
said  Steel  Company  of  the  Republic,  duly  authorized 
thereto,  have  hereunto  affixed  the  signature  and  seal  of 
their  said  Company,  all  being  done  in  the  City  of  Phila- 
delphia, Pennsylvania,  on  this  the  3rd  day  of  October, 
1908. 

Steel  Company  of  the  Republic, 
("corporate    \  By  John  H.  Sherman, 

I      SEAL.        J  President. 

Attest  Seal: 

William  H.  McDonald, 
Secretary. 

A  directors'  resolution  as  in  the  following  form,  when 
duly  certified  by  the  secretary  of  the  company,  is  an  ex- 
cellent form  of  corporate  proxy. 

Form  72. — Corporate  Proxy.     Directors'  Resolution. 

Whereas,  This  corporation  is  the  owner  of  record  of  Five  Hundred 
Shares  of  the  Capital  Stock  of  the  Howard  Welding  Company  of  New 
York  City,  and  is  entitled  to  representation  thereon  at  the  annual  meet- 
ing of  said  Company  to  be  held  in  its  office,  No.  22  Broad  St.,  New  York 
on  the  10th  day  of  October,  1908,  at  10  o'clock  in  the  forenoon : 

Now,  Therefore,  Be  It  Resolved,  That  Frederick  W.  Morton  of 
New  York  City  be  and  hereby  is  constituted  and  appointed  the  true  and 
lawful  attorney  of  this  Company  to  attend  the  said  annual  meeting  of  the 
Howard  Welding  Company,  with  full  power  and  authority  to  vote  thereat 
in  the  name,  place  and  stead  of  this  Company  upon  the  said  Five  Hun- 
dred Shares  of  stock,  and  to  do  all  such  other  things  thereat  competent 
to  a  stockholder  of  said  Howard  Welding  Company,  as  may  in  his  judg- 
ment be  necessary  or  advantageous  for  the  interests  of  this  Company,  and 
that  he  be  hereby  granted  for  said  meeting  and  for  any  meetings  ad- 
journed therefrom,  any  and  all  powers  belonging  to  or  pertaining  to  this 
Company  as  a  stockholder  of  the  aforesaid  Howard  Welding  Company, 
and  that  all  its  said  proxy  shall  lawfully  do  at  said  meeting  in  the  name, 
place  and  stead  of  this  Company  be  hereby  fully  ratified  and  confirmed. 

In  some  state  the  statutes  empower  the  corporate  offi- 
cials to  vote  the  stock  of  other  corporations  held  by  their 
corporation.  In  such  case  no  proxy  is  necessary,  but  a 
certification  that  the  official  representing  the  company  is 
its  official,  properly  representing  the  company,  is  required. 


292  FORMS    REI/ATING    TO    MEjeTlNGS. 

Form  73. — Revocation  of  Proxy. 

Revx)Cation  of  Proxy. 


Know  All  Men  by  These  Presents  : 

That  I,  the  undersigned,  do  hereby  revoke  and  annul  any  and  all 
proxies  or  powers  of  attorney  heretofore  given  by  me,  authorizing  or 
empowering  any  person  or  persons  to  represent  me,  or  vote  in  my  name 
and  stead  or  act  for  me  in  any  way  whatsoever  at  any  meeting  or  meet- 
ings of  the  stockholders  of  the  Carney  Falls  Power  Company. 

Witness  my  signature  and  seal  this  10th  day  of  October,  1908. 

Daniel  H.  Ronalds.     (ly.  S.) 
In  the  presence  of 
John  H.  Dunn. 

The  foregoing  revocation  of  outstanding  proxies  is 
sweeping  in  its  terms.  If  some  particular  proxy  is  to  be 
excepted  from  the  general  revocation,  such  proxy  may  be 
specifically  reserved,  or  otherw^ise  the  revocation  may  it- 
self be  limited  by  its  terms  to  the  one  or  more  proxies  to 
be  revoked,  and  any  other  proxies  then  outstanding  are 
not  affected. 


CHAPTER   XXXI. 
FORMS  OF  MOTIONS  AND  RESOLUTIONS. 


In  the  proceedings  of  corporate  meetings,  whether  of 
stockholders  or  directors,  anything  obviously  proper  and 
of  no  great  importance  may  be  merely  directed  by  the 
president,  and,  in  the  absence  of  objection,  this  is  held  to 
be  the  action  of  the  meeting.  Matters  of  more  import- 
ance are  sometimes  acted  upon  in  this  same  way,  but, 
usually,  and  preferably,  action  is  taken  by  means  of  either 
a  motion  or  a  resolution. 

There  is  no  distinct  line  of  demarcation  between  these 
two.  They  differ  as  to  form  but  both  are  expressions  of 
the  decisions  of  the  meeting  and  are  of  the  same  legal 
force.  The  motion  is  the  simpler  in  form,  and,  though 
there  is  no  well  established  rule,  is  usually  employed  for 
matters  of  minor  importance,  while  resolutions,  which  are 
formal  and  usually  go  further  into  their  subject  matter, 
are  employed  for  such  important  corporate  actions  as  re- 
quire a  more  complete  statement  and  record.  (See  Ch. 
XIX.) 

(a)  Motions. 

Motions  are  not  as  a  rule  submitted  in  writing.  The 
secretary  must  therefore  exercise  every  care  to  get  the 
sense  of  what  is  intended.  If  he  is  in  doubt  in  any  case  as 
to  whether  he  has  understood  the  motion,  or  if  its  subject 
matter  is  of  unusual  importance,  or  if  it  is  desirable  that 
the    exact    wording   be    preserved,    the    presiding   officer 

293 


294  FORMS    RELATING    TO    MEE;TINGS. 

should  request  the  maker  of  the  motion  to  repeat  it,  or, 
better,  to  reduce  it  to  writing.  When  this  is  done,  the 
motion  is  turned  over  to  the  secretary,  and,  if  carried,  is 
incorporated  in  his  minutes  in  the  exact  form  submitted. 

The  following  forms  show  motions  as  they  appear  in 
the  secretary's  minutes.  The  form  is  the  same  for  either 
stockholders'  or  directors'  minutes. 

Form  74. — Motion.     To  Receive  President's  Report. 

"On  motion  duly  seconded  and  unanimously  carried,  the  President's 
report  as  read  was  ordered  received  and  filed." 


Form  75. — Motion.     Instructing  Secretary  to  Cast  Vote. 

"There  being  no  other  nominations,  the  Secretary  was  instructed  by 
motion  unanimously  carried,  to  cast  the  single  ballot  of  the  meeting  for 
the  five  candidates  for  Directors  already  named." 


Form  76. — Motion.     Instructing  Secretary  to  Cast  Vote. 
Formal. 

"On  motion  unanimously  carried,  the  Secretary  was  instructed  to  cast 
the  single  ballot  of  the  meeting  as  follows : 

For   President John  H.  McNeil. 

"    Vice-President   Samuel  French. 

"    Secretary    Harry  McGill. 

"    Treasurer  Joseph  F.  Macklin." 

An  amendment  to  the  by-laws  is  usually  acted  upon  by 
means  of  a  resolution.  (See  Form  83.)  In  the  following 
instance,  as  the  amendment  is  of  minor  importance,  it  is 
decided  by  motion. 

Form  77. — Motion.     To  Amend  By-Laws. 

"By  motion  unanimously  carried,  Section  1  of  Article  II  of  the  By- 
Laws  was  amended  by  changing  the  hour  for  the  assembling  of  the  an- 
nual meeting  of  the  Company  from  12  o'clock  noon  to  3  o'clock  P.  M." 


MOTIONS  AND  RESOI^UTIONS.  295 

Form  78.— Motion.     To  Pay  Bills. 

"Upon  motion  duly  seconded  and  unanimously  carried,  the  Treasurer 
was  instructed  to  pay  the  account  of  the  Meyer  CTontracting  Company  for 
One  Hundred  and  Thirty-Five  Dollars,  due  for  repairs  on  roof  of  the 
Franklin  Mill  as  per  statement  submitted." 

Usually  the  secretary  uses  his  discretion  as  to  record- 
ing the  names  of  the  parties  making  and  seconding  mo- 
tions. They  are  not  essential  in  the  case  of  routine  mo- 
tions, motions  covering  matters  of  minor  importance  or 
motions  unanimously  carried.  Under  other  circumstances 
the  name  of  the  party  making  and  also  the  party  second- 
ing a  motion  should  be  recorded.  The  vote  on  important 
motions  when  there  is  opposition,  is  sometimes  recorded 
as  well. 

Form  79. — Motion.     To  Employ  General  Manager. 

"Mr.  Henry  Sheldon  moved  that  James  J.  McLain  be  employed  as 
General  Manager  of  the  Company  for  a  term  of  two  years  from  date,  at 
the  annual  salary  of  Fifteen  Hundred  Dollars  payable  in  monthly  instal- 
ments. The  motion  was  seconded  by  Mr.  Charles  H.  Corbett  and  car- 
ried; Messrs.  Sheldon,  McLemore,  Corbett  and  Johnson  voting  in  the  af- 
firmative, and  Messrs.  Franklin,  Hereford  and  Trask  voting  in  the  nega- 
tive." 

A  motion  in  writing  should  appear  on  the  minutes  in 
the  exact  form  submitted,  as  in  the  following  example, 
and  should  be  introduced  by  an  explanatory  statement,  as 
"The  following  motion  offered  by  Mr.  Wilson  was  duly 
seconded  and  carried  by  unanimous  vote." 

Form  80. — Motion.     To  Appoint  an  Investigating  Com- 
mittee. 

"Moved,  that  the  President  be  authorized  and  directed  to  appoint  a 
committee  consisting  of  three  directors  of  this  Company,  to  investigate 
the  books  and  accounts  of  the  Treasurer  for  the  past  three  years,  such 
committee  to  have  full  access  to  the  Company's  financial  records  and  to 
have  authority  to  employ  an  Auditor  to  conduct  the  technical  work  of  their 
examination,  the  compensation  of  said  Auditor  not  to  exceed  the  sum  of 
Three  Hundred  Dollars." 


296  FORMS    RELATING    TO    MEETINGS. 

(b)  Resolutions. 

Resolutions  should  be  submitted  in  writing.  They  are 
entered  in  the  minutes  prefaced  with  such  explanatory 
remarks  as  the  conditions  require  or  the  secretary  thinks 
desirable,  as  "Upon  motion  duly  made  and  seconded  the 
following  resolution  was  unanimously  adopted,"  or  "The 
following  resolution  was  presented  by  Mr.  Cassellton, 
seconded  by  Mr.  Edwards  and  adopted,  Messrs.  Cassellton, 
Edwards,  Brice  and  McNeil  voting  in  the  affirmative,  and 
Messrs.  Mack  and  Adams  voting  in  the  negative."  A  pre- 
amble is  always  admissible  but  if  the  subject  matter  of  a 
resolution  is  simple,  is  not  necessary. 

There  is  no  difference  in  form  between  a  resolution 
adopted  by  the  stockholders  and  one  adopted  by  the  di- 
rectors. 

(i)  Stockholders'  Resolutions. 

Form  8i. — Resolution.     For  Sale  of  Entire  Assets. 

Whereas,  William  F.  Gaynor  and  James  G.  Reilly  as  Trustees  before 
organization  for  the  New  Hampshire  Granite  Company,  have  made  a 
proposition  to  purchase  the  entire  plant  and  business  of  this  Company  as 
a  going  concern,  including  all  assets  and  liabilities,  save  cash  in  bank  and 
on  hand,  for  Ten  Thousand  ($10,000)  Dollars  in  cash  and  Forty  Thousand 
($40,000)  Dollars  par  value  of  the  stock  of  said  New  Hampshire  Granite 
Company : 

Now,  Therefore,  Be  It  Resolved,  That  the  said  proposition  be  hereby- 
approved,  and  that  the  Directors  of  this  Company  be  and  hereby  are  fully 
authorized,  instructed  and  empowered  to  accept  the  said  proposition  for 
the  sale  of  its  entire  property  and  business,  and  to  do  all  things  necessary 
to  carry  such  acceptance  into  effect  according  to  the  terms  of  said  proposi- 
tion. 

(For  corresponding  directors'  resolution,  see  Form  98.) 

Form  82. — Resolution.     Authorizing  Consolidation. 

Whereas,  A  consolidation  of  the  Midvale  Foundry  Company  and  the 
Midvale  Steel  Company  under  the  name  of  the  New  Jersey  Four^dry  Com- 
pany, has  been  proposed,  on  terms  and  conditions  set  forth  in  an  agree- 
ment entered  into  on  the  17th  day  of  November,  1908,  between  the  Di- 
rectors of  said  corporations  and  heretofore  submitted  to  the  stockholders 
of  this  Company;  and 

Whereas,  Said  proposed  consolidation  meets  with  the  approval  of  the 
stockholders  of  this  corporation : 


MOTIONS  AND  RESOLUTIONS.  297 

Now,  Therefore,  Be  It  Resolved,  That  the  Board  of  Directors  of 
this  Company  be  and  hereby  is  fully  authorized,  empowered  and  instructed 
to  take  all  such  steps  as  may  be  necessary  or  desirable  to  carry  said  con- 
solidation into  effect  in  accordance  with  the  terms  of  said  agreement  be- 
tween the  Directors  of  the  two  aforementioned  corporations. 

(See  Minutes,  Form  111.) 

Form  83. — Resolution.     To  Amend  By-Laws. 

Whereas,  Section  4  of  Article  IV  of  the  By-laws  of  this  Company 
reads  and  provides  in  part  as  follows : 

"The  Treasurer  shall  have  the  custody  of  all  moneys  and  securi- 
ties of  the  Company  and  shall  keep  regular  books  of  account  and 
balance  the  same  "each  month." 
And  Whereas,  It  seems  to  the  stockholders  of  the  Company  that  the 
interests   of   the   Company   will   be   better   conserved    if   its    moneys    and 
securities  are  placed  in  the  custody  of  its  President : 

Now,  Therefore,  Be  It  Resolved,  That  said  Section  4  of  Article  IV 
of  said  By-laws  be  and  hereby  is  amended  as  to  the  part  above  set  forth 
to  read  and  provide  as  follows : 

"The  Treasurer  shall  keep  regular  books  of  account  and  balance 
the  sam«  each  month." 
and  that  Section  2  of  Article  IV  of  said  By-laws  be  amended  to  read  and 
provide  as  follows : 

"The  President  shall  preside  at  all  meetings  of  stockholders  and 
directors ;  shall  have  general  supervision  of  the  affairs  of  the  Com- 
pany; shall  have  the  custody  of  all  its  moneys  and  securities;  shall 
sign  or  countersign,  etc." 

(2)  Directors'  Resolutions. 

The  following  is  a  simple  form  of  resolution  authoriz- 
ing the  treasurer  to  open  a  bank  account.  It  should  be 
certified  before  submission  to  the  bank.     (See  Form  i68.) 

Form  84. — Resolution.     To  Open  Bank  Account. 

Resolved,  That  the  Treasurer  be  and  hereby  is  authorized  and  in- 
structed to  open  an  account  for  the  Company  with  the  Seaboard  National 
Bank  of  New  York  City  and  to  deposit  therein  all  funds  of  the  Com- 
pany coming  into  his  possession,  such  account  to  be  in  the  name  of  the 
Company  and  funds  deposited  therein  to  be  withdrawn  only  by  check 
signed  by  the  Treasurer  and  countersigned  by  the  President. 

In  some  cases  the  designated  bank  requires  a  certified 
transcript  of  any  by-laws  relating  to  the  duties  and  powers 
of  the  officers  in  relation  to  the  funds.     Such  by-laws  may 


298  FORMS    RKI.ATING    TO    M^EITINGS. 

be  certified  separately  (See  Form  172),  or  may  be  included 
in  the  resolution,  as  in  the  following  example. 

Form  84a. — Resolution.    Designating  Depositary. 

Whereas,  Section  3,  Article  VII  of  the  By-laws  of  the  Standard 
Milling  Company  is  as  follows : 

"The  Moneys  of  the  Company  shall  be  deposited  in  the  name  of 
the  Company  in  such  bank  or  banks  as  the  Board  of  Directors  shall 
designate,  and  shall  be  drawn   out  only  by  checks   signed  by  the 
Treasurer  and  countersigned  by  the  President,  unless  otherwise  pro- 
vided by  resolution  of  the  Board." 
Now,   Therefore,   In   pursuance   of  said   By-law,   the   Board   of   Di- 
rectors of  the  Standard  Milling  Company  hereby  designates  the  Sherman 
Trust  Company  of  New  York  City  as  a  depository  of  this  Company,  and 
authorizes  and  instructs  the  Treasurer  to  open  an  account  with  said  Trust 
Company  in  the  name  of  the  Company,  and  to  deposit  therein  all  funds  of 
the  Company  coming  into  his  custody,  save  as  may  be  otherwise  directed 
by  the  Board,  said  funds  to  be  withdrawn  only  by  check  signed  by  the 
Treasurer  and  countersigned  by  the  President. 

(For  certification  of  above  resolution,  see  Form   168a.) 

In  many  cases  the  banks  have  their  own  forms  of  reso- 
lution for  designation  of  the  corporate  depositary,  which 
they  supply  on  request  and  which  they  naturally  prefer 
should  be  used.  As  a  rule  these  forms  are  good,  though 
occasionally  the  latitude  and  power  they  confer  upon  the 
officers  of  the  corporation  are  somewhat  excessive.  If 
this  is  the  case,  the  resolution  may  be  modified  to  meet  the 
requirements  of  the  particular  corporation  while  still  pre- 
serving its  general  form.  The  form  of  resolution  which 
follows  is  used  by  some  of  the  large  New  York  banks. 

Form  85. — Resolution.     Designating  Bank. 

Resolved,  That  the  Sherman  National  Bank  of  the  City  of  New  York 
be  and  the  same  is  hereby  designated  as  the  depository  of  the  funds  of 
the  American  Textile  Company,  and  that  an  account  be  opened  with  such 
Bank  in  the  name  of  said  Company,  and  that  George  H.  Wahrman,  the 
Treasurer  of  said  Company,  so  long  as  he  shall  be  Treasurer  thereof  is 
hereby  authorized  to  sign  or  endorse  any  instrument  for  or  on  behalf  of 
said  Company  and  have  the  same  placed  to  the  credit  of  said  account,  and 
also  from  time  to  time  to  withdraw  or  transfer  by  check  or  draft  or  other 
instrument  signed  by  him  and  countersigned  by  Henry  G.  Maxim,  Presi- 
dent of  the  said  American  Textile  Company,  or  any  successor  President 
of  said  Company,  any  amount  or  parts  thereof  which  may  from  time  to 
time  be  to  the  credit  of  said  account;  and 


MOTIONS  AND  RESOLUTIONS.  299 

Resolved  Further,  That  the  respective  powers  and  the  authority  con- 
veyed by  this  present  resolution  shall  pass  to  any  duly  elected  and  qualified 
successor  Treasurer  or  President  of  the  said  American  Textile  Company 
without  further  action  of  this  Board,  and  as  fully  and  to  the  same  extent 
as  if  said  successor  officers  were  named  herein. 

(For  certification  of  this  resolution,  see  Form  169.) 
Under  this  resolution  if  a  new  treasurer  or  president 
is  elected,  nothing  is  necessary  save  for  the  election  and 
acceptance  of  the  new  official  to  be  certified  to  the  bank  by 
the  secretary  of  the  company.     (See  Forms  170,  171.) 

Form  86. — Resolution.     Authorizing  Issue  of  Stock. 

Resolved,  That  the  President  and  Treasurer  be  and  hereby  are  au- 
thorized and  directed  to  issue  certificates  of  the  full-paid  Capital  Stock  of 
this  Company  to  the  aggregate  amount  of  Ten  Thousand  ($10,000)  Dol- 
lars, and  to  deliver  the  same  to  the  written  order  of  Robert  H.  Stuart, 
Fiscal  Agent  for  the  Company,  against  payment  into  the  treasury  of  the 
Company  of  the  full  par  value  thereof. 


Form  87. — Resolution.     Authorizing  Contract. 

Resolved,  That  the  President  and  Secretary  be  and  hereby  are  au- 
thorized and  instructed  to  enter  into  a  contract  with  the  Wilbur  Collins 
Construction  Company  on  behalf  of  this  corporation,  for  the  erection  of  a 
power  house,  the  construction  of  said  power  house  to  be  in  accordance 
with  the  plans  and  specifications  on  file  in  the  office  of  this  corporation  and 
the  cost  thereof  not  to  exceed  Twenty  Five  Thousand  ($25,CKX))  Dollars, 
payment  thereof  to  be  made  as  set  forth  in  the  written  proposition  hereto- 
fore submitted  to  this  corporation  by  the  said  Wilbur  Collins  Construc- 
tion Company. 


Form  88. — Resolution.     Declaring  Dividend. 

Resolved,  That  the  sum  of  Ten  Thousand  ($10,000)  Dollars  be  and 
hereby  is  appropriated  and  set  aside  from  the  surplus  profits  of  this  Com- 
pany for  the  payment  of  the  regular  Two  (2%)  Per  Cent,  quarterly 
dividend  upon  its  outstanding  stock,  said  dividend  to  be  due  and  payable 
on  the  20th  day  of  October,  1908,  to  stockholders  of  record  as  shown  by 
the  books  of  the  Company  at  the  close  of  business  on  the  iSth  day  of 
October,  1908. 

Resolved  Further,  That  the  Treasurer  of  this  Company  be  hereby 
authorized  and  instructed  to  give  due  notice  of  such  dividend  and  to  pay 
the  same  when  due. 


300  FORMS    REI.ATING    TO    MEETINGS. 

Form  89. — Resolution.     Declaring  Dividend.     Preferred 
Stock. 

Resolved,  That  the  semi-annual  dividend  of  Three  (3%)  Per  Cent, 
upon  the  outstanding  Preferred  Stock  of  the  Company  be  and  hereby  is 
declared  from  surplus  profits,  said  dividend  to  be  paid  on  the  10th  day  of 
October,  1908,  and  to  be  payable  to  stockholders  who  appear  of  record  on 
the  1st  day  of  October,  1908,  at  3  o'clock  P.  M.,  and  that  the  Treasurer  of 
this  Company  be  hereby  instructed  and  fully  authorized  to  give  due  notice 
of  such  dividend  and  to  pay  the  same  on  the  date  set  forth. 


Form  90. — Resolution.     Declaring    Dividend.     Preferred 
and  Common  Stock. 

Whereas,  The  surplus  profits  of  this  Company  now  exceed  the  sum 
of  Ten  Thousand  ($10,000)  Dollars  required  by  the  By-laws  of  this  Com- 
pany to  be  held  as  a  reserve,  and  such  excess  is  now  available  for  pay- 
ment of  dividends : 

Now,  Therefore,  Be  It  Resolved,  That  a  dividend  of  Five  (5%)  Per 
Cent,  be  and  hereby  is  declared  upon  the  outstanding  Preferred  Stock  of 
this  Company,  and  a  dividend  of  Three  (3%)  Per  Cent,  on  the  outstand- 
ing Common  Stock  of  this  Company,  said  dividends  to  be  payable  from 
said  excess  surplus  profits  of  the  Company  on  the  5th  day  of  November, 
1908,  to  stockholders  appearing  of  record  at  3  o'clock  P.  M.,  on  this  15th 
day  of  October,  1908;  and  that  the  Treasurer  of  this  Company  be  hereby 
fully  authorized  and  instructed  to  give  proper  notice  of  said  dividends,  to 
pay  the  same  when  due,  and  to  take  all  other  necessary  steps  to  carry  out 
the  intent  of  the  present  resolution. 


Form  91. — Resolution.     Appointing  Managing  Director. 

Resolved,  That  Mr.  William  S.  Weston  be  hereby  appointed  Manag- 
ing Director  of  this  Company  and  be  given  the  general  supervision  and 
management  of  the  Company's  aflfairs  and  business,  with  such  other  powers 
and  duties  as  the  Board  of  Directors  may  from  time  to  time  confer  upon 
him ;  the  annual  salary  of  said  Managing  Director  to  be  Twenty-Four 
Hundred  ($2400)  Dollars,  payable  in  monthly  instalments  of  Two  Hun- 
dred ($200)  Dollars  each. 


Form  92. — Resolution.     Calling  Special  Meeting  of  Stock- 
holders. 

Whereas,  The  authorized  Capital  Stock  of  this  corporation  is  One 
Hundred  Thousand  ($100,000)  Dollars  divided  into  One  Thousand 
(1,000)  Shares  of  Common  Stock  of  the  par  value  of  One  Hundred 
($100)  Dollars  each,  of  which  Five  Hundred  (500)  Shares  are  issued  and 
Five  Hundred  (500)  Shares  are  unissued;  and 


MOTIONS  AND  RESOI^UTIONS.  301 

Whereas,  It  is  deemed  advisable  by  this  Board  that  said  Capital 
Stock  shall  be  so  classified  and  divided  into  Common  and  Preferred  Stock 
that  the  said  Five  Hundred  (500)  Shares  of  outstanding  stock  shall  be 
and  remain  Common  Stock,  but  that  the  said  Five  Hundred  (500)  Shares 
of  unissued  stock  shall  become  and  be  non-voting  Preferred  Stock,  en- 
titled to  receive  a  cumulative,  preferred  dividend  of  Six  (6%)  Per  Cent, 
per  annum  and  redeemable  at  its  par  value  at  the  option  of  the  Company 
at  any  timie  after  ten  years  from  the  date  of  its  issue,  and  upon  the 
liquidation  of  the  Company  to  be  redeemed  if  outstanding,  at  its  full  face 
value  from  the  assets  before  any  payment  is  made  upon  the  Common 
Stock  but  not  to  participate  further  in  said  assets : 

Now,  Therefore,  Be  It  Resolved,  That  a  special  meeting  of  the  stock- 
holders of  this  Company  be  and  hereby  is  called  to  meet  in  the  office  of 
the  Company  on  the  10th  day  of  October,  1908,  at  10  o'clock  in  the  fore- 
noon, for  the  purpose  of  considering  and  acting  upon  the  proposed  classi- 
fication of  the  stock  of  this  Company  as  afore  set  forth,  and  that  the  Sec- 
retary of  the  Company  be  hereby  authorized  and  instructed  to  send  out 
notices  of  said  meeting  as  required  by  law  and  by  the  By-laws  of  this 
Company. 

This  resolution  conforms  to  the  requirements  of  the 
New  York  laws,  classification  of  the  company's  stock  re- 
quiring authorization  by  the  stockholders. 

Form  93. — Resolution.    To  Sell  Bonds. 

Resolved,  That  Howell  &  Wilkins  of  New  York  City  be  and  hereby 
are  authorized  and  empowered  to  sell  bonds  of  this  Company  to  the 
aggregate  face  value  of  One  Hundred  Thousand  ($100,000)  Dollars,  and 
to  deduct  from  the  price  received  therefor  a  commission  of  Two  (2%) 
Per  Cent.,  provided,  however,  that  the  net  price  received  by  this  Company 
for  each  One  Thousand  Dollar  ($1,(XX))  Bond  shall  not  be  less  than  Nine 
Hundred  and  Fifty  ($950)  Dollars;  and 

Resolved  Further,  That  the  Treasurer  of  this  Company  be  and  here- 
by is  authorized  and  instructed  to  deliver  said  bonds  in  whole  or  in  part 
on  the  written  order  of  the  said  Howell  &  Wilkins,  and  to  receive  and 
receipt  for  all  amounts  paid  by  them  into  the  treasury  of  the  Company  on 
account  of  sales  of  said  bonds. 


Form  94. — Resolution.     To  Purchase  Property. 

Resolved,  That  the  President  and  Treasurer  of  the  Company  be  and 
hereby  are  authorized  and  instructed  to  consummate  the  purchase  of  the 
West  Valley  Marl  Beds  in  accordance  with  the  terms  of  the  option  under 
which  said  Beds  are  now  held,  and  that  they  be  further  authorized  and 
empowered  to  do  all  such  things  for  and  on  behalf  of  the  company  and 
in  its  name  as  may  be  necessary  thereto. 

(See  Minutes,  Form  113.) 


302  FORMS    REI^ATING    TO    MEETINGS. 

Form  95. — Resolution.     For  Settlement  of  Claim. 

Resolved,  That  the  President  and  Secretary  of  this  Company,  acting 
with  its  Counsel,  be  hereby  instructed  to  use  their  best  efforts  to  arrive 
at  some  favorable  settlement  with  the  employees  of  this  Company  in- 
jured in  the  recent  accident,  and  that  said  officers  be  hereby  fully  author- 
ized and  empowered  to  accept  any  settlement  deemed  by  them  satisfac- 
tory and  approved  by  the  Counsel  of  the  Company,  provided  that  the 
total  payments  involved  therein  shall  not  exceed  the  sum  of  Twenty-five 
Hundred  ($2500)  Dollars. 

(See  Minutes,  Form  114.) 

Form  96. — Resolution.     Ratifying  Sale  of  Property. 

Whereas,  The  President  and  Treasurer  of  this  Company  have  here- 
tofore on  the  21st  day  of  July,  1908,  sold  and  disposed  of  the  machinery, 
tools  and  other  apparatus  belonging  to  this  Company  and  then  in  the 
premises  at  235  Main  St.,  Newark,  New  Jersey,  the  amount  realized  from 
such  sale — Two  Thousand,  Seven  Hundred  and  Fifty  ($2,750)  Dollars — 
having  been  duly  paid  into  the  treasury  of  this  Company ;  and 

Whereas,  Said  sale  was  made  without  authorization  from  this  Board, 
owing  to  the  absence  from  the  city  of  a  majority  of  its  members;  and 

Whereas,  In  the  opinion  of  the  Board  such  sale  was  for  the  best  inter- 
ests of  the  Company,  and  the  action  of  said  officers  in  consummating  the 
same  therefore  meets  with  its  approval : 

Now,  Therefore,  Be  It  Resolved,  That  the  action  of  the  said  of- 
ficers of  this  Company  in  selling  and  disposing  of  the  aforementioned 
property  as  aforesaid  be  and  hereby  is  ratified,  approved  and  confirmed, 
and  that  said  action  be  accepted  as  the  action  of  the  Company,  and  the 
assignments  thereof  be  ratified,  confirmed  and  accepted  as  the  duly  exe- 
cuted assignments  of  this  Company,  of  the  same  force  and  effect  as  if 
entered  into  under  direct  authorization  of  this  Board. 

Form  97. — Resolution.     For  Removal  of  Officer. 

Whereas,  In  the  opinion  of  this  Board  the  interests  of  the  Company 
do  not  permit  the  continuance,  in  his  present  official  position,  of  its  Presi- 
dent, John  Farraday;  and 

Whereas,  The  said  John  Farraday  has  refused  to  resign  although  re- 
quested thereto  by  members  of  this  Board  duly  authorized  thereunto : 

Now,  Therefore,  Be  It  Resolved,  That  exercising  its  statutory  power 
the  Board  of  Directors  of  the  Manly  Electric  Corporation  does  hereby 
remove  the  said  John  Farraday  from  his  official  position  as  President 
of  this  Company,  and  declares  said  office  vacant  and  said  John  Farraday 
no  longer  authorized  to  act  on  its  behalf  in  any  capacity;  and 

Resolved  Further,  That  the  Secretary  of  the  Company  be  and  here- 
by is  instructed  to  at  once  notify  the  said  John  Farraday  of  his  removal 
from  the  presidency  of  this  Company,  and  to  give  such  other  proper  and 
public  notice  of  said  removal  as  may  in  his  judgment  be  necessary  to 
protect  the  interests  of  the  Company. 


MOTIONS  AND  RESOLUTIONS.  303 

Form  98. — Resolution.     For  Sale  of  Entire  Assets. 

Whereas,  A  proposition  has  been  made  by  the  Trustees  of  the  New 
Hampshire  Granite  Company  to  purchase  the  entire  property  and  busi- 
ness of  this  Company  for  Ten  Thousand  ($10,000)  Dollars  in  cash  and 
Forty  Thousand  ($40,000)  Dollars  in  stock  of  the  said  proposed  corpora- 
tion as  set  forth  in  their  written  proposition  heretofore  ordered  to  be 
spread  upon  the  minutes  of  this  meeting;  and 

Whereas,  The  stockholders  of  this  Company  in  duly  assembled  meet- 
ing at  which  all  the  voting  stock  of  the  Company  was  represented  in  per- 
son or  by  proxy,  did  by  resolution  unanimously  carried,  approve  said  sale 
and  authorize  and  instruct  this  Board  to  accept  said  proposition : 

Now,  Therefore,  Be  It  Resolved,  That  the  said  proposition  be  and 
the  same  is  hereby  accepted  by  this  Company  on  the  terms  set  forth  in 
said  written  proposition  as  entered  upon  the  minutes  of  this  meeting,  and 
the  President  and  Secretary  of  the  Company  are  hereby  empowered  and 
instructed  to  execute  all  proper  instruments  to  carry  such  acceptance  into 
effect,  and  on  behalf  of  this  Company  to  receive  the  said  Ten  Thousand 
($10,000)  Dollars  in  cash  and  Forty  Thousand  ($40,000)  dollars  in  stock 
of  the  said  New  Hampshire  Granite  Company,  and  to  do  all  such  other 
things  in  connection  with  such  sale  and  the  said  transfer  of  property  as 
may  be  found  necessary  for  its  proper  consummation. 

(For  corresponding  stockholders'   resolution,  see  Form  81.) 


CHAPTER    XXXII. 
INCIDENTAL  FORMS. 


The  secretary  will  find  a  list  of  stockholders,  giving 
the  stock  held  by  each  and  arranged  as  in  the  following 
form,  of  much  convenience  for  use  at  stockholders'  meet- 
ings. This  does  not  take  the  place  of  the  statutory  list 
required  in  some  states  (See  §  8i),  but  is  merely  for  use 
in  calling  the  roll  or  noting  those  present  and  absent,  and 
preserving  in  compact  form  a  record  of  the  results. 

Form  99. — Secretary's  List  of  Stockholders. 


n 

IDUSTR 
I 

lAL    SUPPLY 

COMPA] 

)ERS. 

'^Y. 

jsT  OF  Stockholi 

October 

10,  1908 

SHARES 

NOT 

PRESENT 

PRESENT 

Name. 

OWNED. 

PRESENT 

IN 
PERSON. 

BY 
PROXY. 

Name  OF  Proxy. 

Adrian,  Henry  F. 

100 

100 

Ahrens,  Sam'l  T.. 

SO 

50 

Allison,  Daniel  H. 

75 

75 

George  T.  Foster. 

Barry,  John  J 

85 

85 

Belmont,  Maurice 

25 

25 

Colville,  Frederick 

100 

100 

Daniels,  E.  F.... 

100 

50 

50 

Harry  H.  Winters. 

Greenwald.Martin 

80 

80 

William  Greenwald. 

Hughes,  Cora  H. 

ISO 

ISO 

Lawrence,  Edw... 

25 

25 

McCabe.  Albert.. 

SO 

50 

W.  B.  Wells. 

MuUins,  Chas.  D. 

35 

35 

Price,  Harvev 

200 

200 

Rollins,  James  H. 

50 

50 

Henry  Siebert. 

Shanlev.  J.  J 

25 

25 

Sherman,  B.  L. . . 

150 

150 

Wiley,  Edwin  H.. 

100 

100 

Harry  T.French. 

Zimmer,  Henry  T. 

100 

166 

•• 

1,500 

150 

945 

405 

304 


INCIDENTAL  FORMS.  305 

The  list  as  shown  is  after  the  secretary's  notations  have 
been  made.  The  data  of  the  first  two  columns  are  taken 
from  the  stock  books  of  the  company  before  the  time  of 
the  meeting.  If  a  stockholder  is  not  represented  at  the 
meeting,  a  check  mark,  or,  better,  the  number  of  his  shares, 
is  entered  in  the  third  column.  If  present  in  person,  the 
number  of  shares  owned  is  entered  in  the  fourth  column. 
If  represented  by  a  proxy,  the  number  of  his  shares  is 
entered  in  the  fifth  column  and  the  name  of  the  person 
holding  the  proxy  in  the  last  column. 

It  will  be  noted  that  in  the  foregoing  list,  a  portion  of 
the  holding  of  one  stockholder  is  entered  in  the  column 
"Not  Present"  and  a  portion  is  entered  in  the  column 
"Present  by  Proxy."  This  shows  that  the  party  gave  a 
proxy  for  a  portion  of  his  stock  and  that  the  person  to 
whom  this  was  given  was  present,  while  the  remaining 
stock  was  not  represented.     (See  Form  66.) 

The  list  when  the  secretary's  notations  are  finished, 
gives  a  complete  record  of  the  attendance  at  the  meeting. 
The  combined  footing  of  columns  four  and  five  give  the 
number  of  shares  represented,  which  added  to  the  footing 
of  column  three  must,  if  the  work  is  correct,  give  the  total 
stock  outstanding  and  equal  the  footing  of  column  two. 

At  the  annual  meeting  routine  work  is  apt  to  be  gone 
through  with  some  rapidity  and  the  secretary  does  not  al- 
ways have  time  for  its  proper  record  unless  provision  is 
made  therefor  prior  to  the  meeting.  For  this  purpose 
outline  minutes  are  frequently  prepared. 

Form  100. — Outline  Minutes  for  Annual  Meeting. 

Minutes. 


INDUSTRIAL  SUPPLY  COMPANY 
of  New  York. 


Annual  Meeting  of  October  10,   1908. 


Meeting  called  to  order  at a.  m.  by. . 

who  presided  over  meeting.    Officiating  Secretary. 


306  FORMS    RELATING    TO    MEETINGS. 

Present  at  meeting  in  person Shares.    By 

Proxy Shares.    Total Shares.     (See  Form 

99  for  this  data.)     Necessary  for  quorum,  751  Shares. 

Copy  of  notice  of  meeting  submitted  with  secretary's  certificate  of  due 
service  attached.    Ordered  spread  upon  minutes. 

Minutes  of  previous  meeting  read  and 

Annual  Reports : 
President's. 
Treasurer's. 
Special. 
Election  of  Directors.    Nominated : 


Inspectors  of  Election; 


Results :     (To  be  taken  from  inspector's  certificate  of  election;  see 
Form  102.) 

New  business. 


These  outline  minutes  are  best  prepared  on  sheets  of 
loose  paper  with  ample  room  between  the  items  for  the 
interpolation  of  any  comments  or  additional  matter. 
They  are  merely  intended  to  afford  memoranda  from 
which  the  secretary  will  later  write  out  the  complete  min- 
utes. If,  through  unexpected  changes  or  omissions,  any 
portion  of  the  outline  minutes  cannot  be  used,  the  secre- 
tary has  merely  to  draw  his  pencil  through  the  part  super- 
seded. 

In  some  states  the  statutes  require  that  the  election  of 
directors  must  be  conducted  by  inspectors.  Elsewhere 
they  or  similar  officers  are  employed  as  a  matter  of  con- 
venience.    (See  §§  90,  91.) 

Usually  inspectors  are  not  sworn,  but  in  some  states 
this  is  required  by  the  statutes  or  is  a  matter  of  custom. 
The  oaths  and  certificates  of  inspectors  of  election  in  the 
general  form  employed  in  New  York  and  New  Jersey 
follow.  They  may  be  easily  modified  to  meet  any  statu- 
tory requirements  of  other  states. 


INCIDENT AI,  FORMS.  307 

Form  loi. — Oath.     Inspectors  of  Election.     New  York. 

Oath  of  Inspectors  of  Election. 

State  of  New  York,       \ 
County  of  New  York,      f"' 

We,  the  undersigned,  duly  appointed  to  act  as  Inspectors  of  Election 
at  the  annual  meeting  of  the  stockholders  of  the  Hudson  River  Naviga- 
tion Company,  to  be  held  in  the  office  of  the  Company,  No.  72  Broadway, 
New  York,  on  the  2nd  day  of  November,  1908,  being  severally  duly  sworn, 
depose  and  say  and  each  for  himself  deposes  and  says  that  he  will  faith- 
fully execute  the  duties  of  Inspector  of  Election  at  such  meeting  with 
strict  impartiality  and  according  to  the  best  of  his  ability. 

Frank  H.  Astor. 
David  J.  McKanE. 
Severally  sworn  to  before  me  this 
2nd  day  of  November,  1908. 

Allen  T.  Bauvelt, 
(■  NOTARIAL  1  Notary  Public  in  and  for  New  York  County. 

\      SEAL.       J 

The  oath  of  the  inspectors  of  election  and  their  cer- 
tificate as  to  the  election  results — as  given  in  the  form 
which  follows — are  usually  written,  as  a  matter  of  con- 
venience, on  one  sheet  of  paper,  the  oath  preceding  the 
certificate. 

Form  102. — Certificate.      Inspectors   of   Election.      New 
York. 

Certificate  of  Inspectors  of  Election. 


We,  the  undersigned,  duly  appointed  Inspectors  of  Election  of  the 
Hudson  River  Navigation  Company  of  New  York  City,  New  York,  do 
hereby  certify  that  at  the  regular  annual  meeting  of  said  corporation,  held 
in  the  office  of  the  Company,  No.  72  Broadway,  New  York  City,  on  the 
2nd  day  of  November,  1908,  a  quorum  being  present,  we  being  first  duly 
sworn  by  oath  hereunto  annexed,  did  conduct  the  election  for  directors  of 
said  corporation  and  that  the  result  of  the  vote  taken  thereat  was  the  elec- 
tion by  the  plurality  vote  set  opposite  their  respective  names,  of  the  fol- 
lowing directors : 

NAMES.  VOTES  received. 

Charles  E.  Shepherd 2,135 

Frank  J.  Piatt 2,000 

Harry  P.  Tucker 1,970 

Edward  T.  Bowles 1.875 

Henry  P.  Moody 1.825 

George  McDonald 1.825 

Albert  T.   Calkins 1,800 

In  Testimony  Whereof,  we  have   executed  this  certificate 
this  2nd  day  of  November,  1908. 

Frank  H.  Astor, 
David  J.  McKane. 


308  FORMS    KEI^ATING    TO    MEETINGS. 

Form  103. — Acknowledgment  of  Inspectors'  Certificate. 

State  of  New  York,   \ 
County  of  New  York,  J  ^•^•• 

On  this  2nd  day  of  November,  1908,  before  me  personally  came  Frank 
H.  Astor  and  David  J.  McKane,  to  me  known  to  be  the  persons  de- 
scribed in  and  who  executed  the  foregoing  certificate  and  severally  ac- 
knowledged that  they  executed  the  same  for  the  use  and  purposes  therein 
set  forth. 

f  NoTARiAi,  ■>  Allen  T.  Bauvelt, 

I      SEAL.     J  Notary  Public  in  and  for  New  York  County. 

In  New  York  the  inspectors'  oath  and  certificate  must 
be  filed  in  the  county  clerk's  office.  In  New  Jersey  they 
are  merely  handed  the  secretary  to  be  filed  among  the 
company  archives. 

Form  104. — Oath.     Inspectors  of  Election.     New  Jersey. 

Oath  of  Inspectors  of  Election. 


State  of  New  Jersey,      \      , 
County  of  Hudson,  fS.. 

We,  the  undersigned,  duly  appointed  Inspectors  of  the  Morris  Con- 
struction Company  of  Jersey  City,  New  Jersey,  being  severally  sworn, 
upon  our  respective  oaths  do  undertake  and  swear  that  we  will  faithfully, 
honestly  and  impartially  perform  our  duties  as  Inspectors  at  the  election 
of  directors  of  said  Company,  to  be  held  in  the  office  of  the  Company, 
No.  15  Exchange  Place,  Jersey  City,  New  Jersey,  on  the  10th  day  of  No- 
vember, 1908,  and  that  we  will  make  a  true  report  of  the  results  of  said 
election. 

Walter  H.  Wilson. 
Oswald  J.  McCutcheon. 
Subscribed  and  sworn  to  before  me  this 

10th  day  of  November,  1908. 
/  notarial  \  Harry  Fenwald, 

\     seal.     J  Notary  Public. 

Form  105. — Certificate.      Inspectors   of   Election.      New 
Jersey. 

Inspectors'  Certificate  of  Election. 


We,  the  undersigned,  Inspectors  of  Election,  duly  appointed  to  con- 
duct the  election  of  directors  of  the  Morris  Construction  Company  of  Jer- 
sey City,  New  Jersey,  at  the  meeting  of  the  stockholders  thereof,  held  this 
day  at  the  office  of  the  Company,  No.  IS  Exchange  Place,  Jersey  City, 
New  Jersey,  do  hereby  certify  and  report  that  we  being  first  duly  sworn 
by  oath  hereunto  annexed,  did  hold  and  conduct  the  said  election  by 
ballot  and  in  due  form,  and  that  the  votes  cast  thereat  were  as  follows : 


INCIDENTAL  FORMS.  309 

NAME.  VOTES  RECEIVED. 

George  A.  Canfield 500 

G.  W.  O'Brien 500 

Harold  W.  Hunter 500 

George  T.   Gravenor 500 

Thomas  F.  Decker 450 

Edward  A.  Miller 425 

Samuel  A.   Webster 425 

In  Testimony  Whereof,  we  have  hereunto  affixed  our  re- 
spective signatures  this  10th  day  of  November,  1908. 

Walter  H.  Wilson. 
Oswald  J.  McCutcheon. 

When  not  required  by  statute  the  formality  of  swear- 
ing inspectors  is  usually  dispensed  with.  An  inspectors' 
report  is,  however,  a  convenient  method  of  entering  the 
results  of  the  election  upon  the  minutes,  and  the  written 
report  is  therefore  desirable.  Its  form  under  such  circum- 
stances might  be  as  follows : 

Form  io6. — Certificate.     Inspectors  of  Election.     General. 

Certificate  of  Inspectors  of  Election. 

We,  the  undersigned,  duly  appointed  Inspectors  of  Election  of  the 
Hamilton  Machine  Company  of  Philadelphia,  Pennsylvania,  to  conduct  the 
election  of  directors  of  said  Company  held  this  14th  day  of  November,  1908, 
at  3  o'clock  p.  M.,  do  hereby  certify  and  report  that  said  election  was 
conducted  by  us  in  due  and  proper  form,  and  that  the  result  of  the  vote 
taken  thereat  by  ballot  was  the  election  by  the  plurality  vote  set  opposite 
their  respective  names  of  the  following  directors : 

NAMES.  VOTES    RECEIVED. 

E.  L.  Lambert 200 

John  C.   Robinson 200 

Walter  S.  Hall 200 

William  H.   Sloane 200 

Alvah  H.  Marshall 200 

In  Witness  Whereof,  we  hereunto  affix  our  respective  sig- 
natures this  14th  day  of  November,  1908. 

Arthur  T.  Newman. 
George  Haywood. 

A  simple  form  of  ballot  for  the  annual  meeting  is  as 
shown  below.  This  is  prepared  before  the  time  of  the 
meeting,  complete — when  the  candidates'  names  are 
known  in  advance — save  as  to  signature  and  the  number 
of  shares  voted. 


310  FORMS    Ri;i.ATING    TO    MEETINGS. 

Form  107. — Ballot.     Annual  Meeting. 

Ballot. 
MAXIM  WATCH  COMPANY. 


Annual  meeting,  November  5,  1908. 


I,  the  undersigned,  hereby  vote  125  shares  of  stock  for  the  following 
named  persons  to  serve  as  Directors  for  the  ensuing  year : 

John  H.  Brown.  Frank  T.  Jones. 

Howard  McCall.  Fowler  McVeigh. 

Marvin  H.  Smith. 

Signature, 

Harold  McKain, 
Proxy  for  Samuel  H.  Hilton. 

Where  a  more  formal  ballot  is  desired  the  following 
will  serve: 

Form  108. — Ballot.     Annual  Meeting.     Formal. 

UNITED  STATES  STEEL  CORPORATION. 
Seventh  Annual  Meeting,  April  20,  1908. 


Ballot. 
The  undersigned  votes  the  number  of  shares  noted  in  the  subscription 
hereto  as  follows : 

(1)  In  favor  of  approving  and  ratifying  all  purchases,  contracts,  acts, 
proceedings,  elections  and  appointments  by  the  Board  of  Directors  or  the 
Finance  Committee,  since  the  sixth  annual  meeting  of  the  stockholders  of 
the  Corporation  on  April  15,  1907,  including  the  purchase  of  the  stock  of 
the  Tennessee  Coal,  Iron  and  Railroad  Company,  as  set  forth  in  the 
minutes  of  the  Board  of  Directors,  or  of  the  Finance  Committee,  or  in  the 
Sixth  Annual  Report. 

(2)  For  the  following  named  persons,  as  Directors  for  the  three 
years  ending  in  191 1 : 

George  F.  Baker,  Marvin  Hughitt, 

William  E.  Corey,  Daniel   G.   Reid, 

John  F.  Dryden,  John  D.  Rockefeller,  Jr., 

Clement  A.  Griscom,  Nathaniel  Thayer. 

(3)  For  the  firm  of  Price,  Waterhouse  &  Co.,  as  independent  audi- 
tors, to  audit  the  books  and  accounts  of  the  Corporation  at  the  close  of 
the  fiscal  year  ending  December  31,  1908. 

Name.  Number  of  Shares. 

Preferred.  Common. 

person 

in  

proxy  for 


CHAPTER  XXXIII. 
MINUTES  OF  CORPORATE  MEETINGS. 


The  general  form  in  which  minutes  are  kept  is  a  mat- 
ter of  custom.  The  details  are  determined  by  the  secre- 
tary of  the  particular  company.  The  headings  should, 
however,  always  be  sufficiently  full  and  explicit  to  show  at 
a  glance  whether  the  meeting  is  of  stockholders  or  di- 
rectors and  whether  it  is  a  regular,  special  or  adjourned 
meeting.  The  date  of  the  particular  meeting,  though  al- 
ways stated  in  the  body  of  the  minutes,  should  also  appear 
in  the  heading  as  a  matter  of  convenience.  (See  Ch. 
XIX.) 

The  name  of  the  corporation  is  frequently  brought  in 
at  the  head  of  every  set  of  minutes.  When  this  is  not  done 
the  minute  book  should  itself  be  very  plainly  stamped  or 
marked  with  the  name  of  the  company,  which  should  also 
appear  on  the  title  page  of  the  book  and  again  at  the  top 
of  the  first  written  page  of  minutes. 

(a)  Stockholders'  Meetings. 

Form  109. — Annual  Meeting  of  Stockholders. 

MIDVALE  FOUNDRY  COMPANY 

of 

New  Jersey. 


Minutes  of  Regular  Meeting  of  Stockholders. 
Held  November  2nd,  1908. 


The  stockholders  of  the  Midvale  Foundry  Company  met  in  annua! 
meeting  in  the  office  of  the  Company  at  Midvale,  New  Jersey,  at  10  o'clock 
in  the  forenoon,  November  2nd,  1908. 

The  meeting  was  called  to  order  and  presided  over  by  Mr.  Frederick 
H.  Colgate,  President  of  the  Company.  The  Secretary  of  the  Company, 
Mr.  W.  A.  Thompson,  acted  as  Secretary  of  the  meeting. 

The  Secretary  after  noting  the  stockholders  present,  reported  that  out 
of  a  total  of  5,000  shares  of  stock  outstanding  and  entitled  to  vote  at  the 

311 


312  FORMS    KEI,ATING    TO    MEETINGS. 

meeting,  4,900  shares  were  represented  at  the  meeting;   3,500  shares  in 
person  and  1,400  shares  by  proxies  liled  with  the  Secretary. 

The  Secretary  then  read  a  copy  of  the  notice  of  the  meeting,  with  hii 
certificate  attached  showing  that  a  copy  thereof  had  been  mailed  to  each 
stockholder  of  record  on  or  before  the  17th  day  of  October,  1908.  He 
also  presented  copies  of  the  "Newark  Advertiser"  and  the  "Jersey  City 
Journal"  under  date  of  October  19th  and  October  26th,  containing  due 
advertisement  of  the  meeting.  The  proof  of  notice  as  presented  was  or- 
dered received  and  filed. 

The  Secretary  produced  the  stock  and  transfer  books  of  the  Company, 
together  with  an  alphabetical  list  giving  the  name,  residence  and  number 
of  shares  of  stock  held  by  every  stockholder  entitled  to  vote  in  the  elec- 
tion of  directors.  This  list  remained  open  to  inspection  during  the  elec- 
tion of  directors  and  for  the  entire  time  of  the  meeting. 

The  minutes  of  the  preceding  annual  meeting  were  then  read  and  ap- 
proved. The  minutes  of  the  special  meeting  of  stockholders  held  Sep- 
tember 10th,  1908,  were  also  read  and  approved. 

Upon  motion  duly  seconded  and  carried,  Messrs.  W.  B.  Johnson  and 
D.  L.  Boyd  were  appointed  Inspectors  of  Election,  were  duly  sworn,  and 
the  meeting  then  proceeded  to  the  election  of  directors.  The  election  was 
held  by  ballot  and  the  polls  were  opened  at  10:15  o'clock  A.  M.  and  closed 
at  11 :15  o'clock  A.  M. 

The  Inspectors  thereupon  presented  their  report  in  writing  showing 
that  Frederick  H.  Colgate,  Benson  R.  Vale,  William  R.  Buchanan,  Mal- 
colm R.  Rigby  and  Robert  H.  McCarter  had  received  a  plurality  of  all  the 
votes  cast,  and  the  said  parties  were  thereupon  declared  to  be  the  duly 
elected  directors  of  the  Company  for  the  ensuing  year  and  until  the  elec- 
tion of  their  successors. 

The  annual  report  of  the  President  was  then  presented  and  upon  re- 
quest was  read  by  him.  The  report  was  by  motion  unanimously  carried, 
ordered  received  and  filed. 

The  Treasurer's  annual  report  was  submitted,  and,  no  objection  being 
offered,  was  ordered  received  and  filed. 

The  report  of  the  committee  appointed  at  the  special  meeting  of  stock- 
holders held  September  10th,  1908,  to  examine  the  accounts  of  the  Com- 
pany, was  received,  and  by  motion  its  findings  were  approved  and  the 
report  ordered  received  and  filed. 

There  being  no  further  business  before  the  meeting,  it  was  adjourned. 

Frederick  H.  Colgate,  W.  A.  Thompson, 

President.  Secretary. 

(See  "Annual  Meeting"   Ch.   X.) 

Form  no. — Special  Meeting  of  Stockholders. 

MIDVALE  FOUNDRY  COMPANY 

of 

New  Jersey. 


Minutes  of  Special  Meeting  of  Stockholders. 
Held  November  19th,   1908. 


The  stockholders  of  the  Midvale  Foundry  Company  assembled  in  spe- 
cial meeting  in  the  office  of  the  Company  at  Midvale,  New  Jersey,  at  10 
o'clock  in  the  forenoon  on  the  19th  day  of  November,  1908,  pursuant  to 
call  of  the  President  followed  by  due  notice  thereof  to  the  stockholders. 


MINUTES.  313 

The  meeting  was  called  to  order  by  Mr.  Frederick  H.  Colgate,  Presi- 
dent of  the  Company,  the  Secretary  of  the  Company,  Mr.  W.  A.  Thomp- 
son, officiating  as  recording  officer. 

The  entire  capital  stock  of  the  Company  was  represented  at  the  meet- 
ing, either  in  person  or  by  proxy  filed  with  the  Secretary. 

The  Secretary  presented  the  Call  and  Notice  pursuant  to  which  the 
meeting  was  held,  with  his  certificate  that  said  notice  had  been  sent  out 
not  less  than  twenty  days  before  the  date  of  meeting.  The  Call  and  Notice 
were  ordered  spread  upon  the  Minute  Book  immediately  following  the 
minutes  of  the  meeting. 

The  President  then  stated  briefly  that  the  meeting  was  assembled  to 
consider  a  proposition  from  the  Midvale  Steel  Company  for  the  con- 
solidation of  the  two  companies  under  the  general  name  of  the  New  Jer- 
sey Foundry  Company,  the  new  company  to  have  a  capitalization  of  One 
Million,  Five  Hundred  Thousand  ($1,500,000)  Dollars  and  stock  in  both 
companies  to  be  exchanged  for  stock  of  the  new  company,  share  for  share. 

A  discussion  of  the  proposition  disclosed  considerable  opposition, 
mainly  on  the  ground  that  the  financial  conditions  of  the  Midvale  Steel 
Company  were  not  such  as  to  make  the  desired  consolidation  advantageous. 

Replying  to  this  objection,  the  President  stated  that  the  financial 
statement  of  the  Midvale  Steel  Company  as  presented  in  the  proposition 
from  that  Company,  apparently  misrepresented  its  real  condition,  and 
suggested  that  an  adjournment  of  the  meeting  be  taken  until  10  o'clock 
A.  M.  on  the  following  day,  in  order  to  permit  the  officers  of  the  Midvale 
Steel  Company  to  furnish  authoritative  information  on  this  point. 

No  objection  being  offered  to  this  suggestion,  the  President  declared 
the  meeting  adjourned  to  assemble  again  in  the  office  of  the  Company  at 
10  o'clock  A.  M.,  November  20th,  1908. 

Frederick  H.  Colgate,  W,  A.  Thompson, 

President.  Secretary. 


Call  and  Notice  of  meeting  appended  hereto  in  accordance  with  the 
requirements  of  the  foregoing  minutes. 

W.  A.  Thompson, 

Secretary. 

(See  "SpeciaV  Meetings'"'  Ch.'  XL) 

Form  III. — Adjourned  Meeting  of  Stockholders. 

MIDVALE  FOUNDRY  COMPANY 

of 

New  Jersey. 


Minutes  of  AojoiniNED  Special  Meeting  of  Stockholders. 
Held  November  20th,  1908. 


(Adjourned  from  meeting  of  November  19th,  1908.) 


The  stockholders  of  the  Midvale  Foundry  Company  met  in  adjourned 
meeting  in  the  office  of  the  Company  at  Midvale,  New  Jersey,  at  10  o'clock 
in  the  forenoon  on  the  20th  day  of  November,  1908. 

Mr.  Frederick  H.  Colgate  called  the  meeting  to  order  and  presided. 
Mr.  W.  A.  Thompson  acted  as  Secretary  of  the  meeting. 

The  stockholders  of  the  Company  were  all  present  in  person  or  by 
proxy. 


314  FORMS    RElvATlNG    TO    MEETINGS. 

The  minutes  of  the  special  meeting  of  stockholders  held  on  the  pre- 
ceding day  and  from  which  the  present  meeting  was  adjourned,  were  read 
for  the  information  of  those  present. 

The  President  then  presented  and  read  to  the  meeting  a  letter  from 
the  Treasurer  of  the  Midvale  Steel  Company,  explaining  satisfactorily  the 
financial  conditions  of  that  Company. 

The  President  further  stated  that  the  proposed  consolidation  had  al- 
ready been  authorized,  on  the  terms  set  forth,  by  the  stockholders  of  the 
Midvale  Steel  Company  and  that  if  it  were  also  authorized  by  the  Mid- 
vale  Foundry  Company,  the  proper  action  would  be  taken  by  the  Boards 
of  Directors  and  officials  of  the  respective  companies  to  comsummate  the 
consolidation   at   the  earliest   possible   moment. 

The  following  resolution  was  then  offered  by  Mr.  Charles  H.  Curtis : 
{See  Form  82.) 

After  a  short  discussion,  Mr.  D.  V.  Jackson  moved  that  the  resolu- 
tion be  adopted.  The  motion  was  seconded  by  Mr.  Henry  B.  Vale,  and 
was  carried  by  unanimous  vote. 

There  being  no  further  business  before  the  meeting,  the  President  de- 
clared it  adjourned. 

Frederick  H.  Colgate,  W.  A.  Thompson, 

President.  Secretary. 

The  proposition  for  consolidation  presented  at  the  spe- 
cial meeting  of  the  stockholders  of  the  Midvale  Foundry 
Company  does  not  appear  appended  to  the  minutes  of  that 
meeting  as  it  would  properly  appear  in  the  minutes  of  the 
directors'  meeting  at  which  final  action  upon  it  is  taken, 
and  does  not  require  to  be  brought  into  both  minutes. 

(b)  Directors'  Meetings. 

The  general  form  of  directors'  minutes  is  the  same  as 
for  those  of  stockholders'  meetings.  It  is,  however,  cus- 
tomary to  enter  the  names  of  those  present,  which  is  not 
usually  done  in  the  case  of  stockholders'  meetings. 

Form  112. — Regular  Meeting  of  Directors. 

FAIRFIELD  CEMENT  COMPANY 
of 

New  York. 


Minutes  of  Regular  Meeting  oe  Directors. 
Held  October  14th,  1908. 


The  Board  of  Directors  of  the  Fairfield  Cement  Company  of  New 
York  assembled  in  regular  meeting  in  the  office  of  the  Company,  Fair- 
field, New  York,  at  3  o'clock  in  the  forenoon  on  Wednesday,  October  14th, 
1908, 


MINUTES.  315 

The  meeting  was  called  to  order  and  presided  over  by  William  A. 
Pierce,  President  of  the  Company.  Mr.  Morris  H.  Goodrich,  Secretary 
of  the  Company,  acted  as  Secretary  of  the  meeting. 

Present:  Messrs.  William  A.  Pierce,  John  H.  Pickering,  Walter  S. 
Laighton,  John  K.  Bates,  Fred  N.  Barney  and  Morris  H.  Goodrich,  con- 
stituting a  quorum  of  the  Board. 

The  minutes  of  the  preceding  meeting  of  September  9th,  1908,  and 
of  the  meetings  of  September  15th,  and  of  September  18th  and  September 
25th  adjourned  therefrom,  were  read  and  approved. 

The  President  reported  that  the  new  plant  of  the  Company  at  the 
West  Valley  marl  beds  was  progressing  rapidly  and  should  be  completed 
on  or  before  December  15th.  He  also  stated  that  arrangements  had  been 
made  for  the  installation  of  the  necessary  machinery  and  for  the  general 
equipment  of  the  plant,  and  that  it  was  hoped  it  would  be  in  full  operation 
before  the  close  of  the  year. 

The  President  also  reported  that  the  Deering  Construction  Company 
was  about  to  contract  for  a  large  amount  of  cement,  aggregating  nearly 
One  Hundred  Thousand  (100,000)  barrels,  with  deliveries  extending  over 
a  year,  and  that  he  felt  confident  that  if  the  Company  would  make  the 
proper  concessions  as  to  price  that  the  contract  could  be  secured,  and 
asked  that  the  Board  authorize  him  to  make  such  concessions — not  ex- 
ceeding fifteen  cents  per  barrel — as  might  be  necessary  to  secure  said  con- 
tract. 

The  President  further  reported  that  additional  funds  amounting  to 
about  Forty  Thousand  ($40,000)  Dollars  would  be  required  for  the  com- 
pletion of  the  West  Valley  plant  not  later  than  December  15th,  1908,  and 
asked  the  Board  to  take  such  action  as  might  be  necessary  to  secure 
these  needed  funds. 

The  Treasurer  then  submitted  a  report  giving  the  receipts  and  ex- 
penditures for  the  past  month  and  showing  a  present  cash  balance  on 
hand  of  $5,525.25. 

Mr.  Arthur  Hurd,  Counsel  for  the  Company,  reported  that  his  in- 
vestigations of  the  titles  of  the  marl  beds  lying  to  the  north  of  the  Com- 
pany's West  Valley  beds  had  disclosed  some  apparent  imperfections,  and 
he  therefore  advised  the  Board  to  postpone  the  consummation  of  the 
purchase  of  these  beds  until  the  titles  were  put  in  satisfactory  shape. 

The  President's  recommendations  were  then  taken  up,  and  after  some 
discussion  the  President  was  authorized  by  motion  unanimously  carried, 
to  make  such  discounts  to  the  Deering  Construction  Company — not  ex- 
ceeding fifteen  cents  per  barrel — as  might  be  necessary  to  secure  the 
contract  mentioned. 

The  matter  of  finance  for  the  West  Valley  plant  was  by  unanimous 
consent  deferred  until  the  next  meeting  of  the  Board. 

The  report  of  the  Company's  Counsel  in  regard  to  the  marl  beds 
north  of  the  West  Valley  beds  was  then  taken  up  for  discussion.  Mr. 
Walter  S.  Leighton  urged  that  no  lengthy  delay  should  be  permitted, 
stating  that  he  was  personally  cognizant  of  the  fact  that  other  parties 
were  desirous  of  securing  these  same  marl  beds  and  that  the  present 
option  under  which  the  beds  were  held  would  expire  in  three  weeks  from 
date  and  he  was  positive  could  not  be  renewed  at  anything  like  the  present 
option  price.  Mr.  Arthur  Hurd,  Counsel  for  the  Company,  thereupon 
stated  that  his  investigations  could  be  completed  inside  a  week,  and  on 
motion  duly  carried,  the  meeting  was  adjourned  to  assemble  again  in  the 
office  of  the  Company,  October  21st,  at  3  o'clock  P.  M. 

William  A.  Pierce,  Morris  H.  Goodrich, 

President.  Secretary. 

(See  " "Meetings  of  * Di'r«;tors.*"'  Ch.*  XV.*) 


316  IfORMS    RELATING    TO    MEEJTINGS. 

Form  113. — ^Adjourned  Meeting  of  Directors. 

FAIRFIELD  CEMENT  COMPANY 

of 

New  York. 


Minutes  of  Adjourned  Meeting  oe  Directors. 
Held  October  21st,  1908. 


(Adjourned  from  regular  meeting  of  October  14,  1908.) 


The  Board  of  Directors  of  the  Fairfield  Cement  Company  met  in 
adjourned  meeting  in  the  office  of  the  Company  at  Fairfield,  New  York, 
at  3  o'clock  in  the  afternoon,  Tuesday,  October  21st,  1908. 

The  meeting  was  called  to  order  and  presided  over  by  the  Presi- 
dent, Mr.  William  A.  Pierce.  The  Secretary  of  the  Company,  Mr.  Morris 
H.  Goodrich,  acted  as  Secretary  of  the  meeting. 

There  were  present  Messrs.  William  A.  Pierce,  John  H.  Pickering, 
Walter  S.  Laighton,  John  K.  Bates,  Fred  N.  Barney,  Silas  H.  Harvey 
and  Morris  H.  Goodrich,  constituting  a  quorum  of  the  Board. 

The  minutes  of  the  board  meeting  of  October  14th,  1908,  were  read 
for  the  information  of  those  present. 

After  the  reading  of  the  minutes,  Mr.  Arthur  Hurd,  Counsel  for  the 
Company,  reported  that  his  investigation  of  the  titles  of  the  marl  beds 
lying  north  of  the  West  Valley  beds  had  been  completed,  that  the  defects 
to  which  he  had  referred  in  his  previous  report  had  been  overcome,  that 
the  titles  were  now  in  good  shape,  and  that  the  purchase  of  the  beds  could 
be  safely  consummated. 

Thereupon  on  motion  of  Mr.  John  H.  Pickering,  seconded  by  Mr. 
Walter  S.  Laighton  and  carried  by  unanimous  vote,  the  following  reso- 
lution was  adopted : 

{See  Form  94.) 

There  being  no  further  business  before  the  meeting,  it  was  ad- 
journed. 

William   A.   Pierce,  Morris   H.   Goodrich, 

President.  Secretary. 

Form  114. — Special  Meeting  of  Directors. 

FAIRFIELD  CEMENT  COMPANY. 

of 

New  York. 


Minutes  oe  Special  Meeting  oe  Directors 
Held  December  7th,  1908. 


The  Board  of  Directors  of  the  Fairfield  Cement  Company  of  New 
York  met  in  special  meeting  pursuant  to  due  call  and  waiver,  in  the  office 
of  the  Company  at  Fairfield,  New  York,  at  3  o'clock  in  the  afternoon  on 
the  7th  day  of  December,  1908. 

The  meeting  was  called  to  order  and  presided  over  by  Mr.  William 
A.  Pierce,  President.  The  Secretary  of  the  Company,  Mr.  Morris  H. 
Goodrich,  recorded  the  proceedings  of  the  meeting. 

There  were  present  Messrs.  William  A.   Pierce,  John  H.  Pickering, 


MINUTES.  317 

Walter  S.  Laighton,  John  K.  Bates,  Fred  N.  Barney,  Silas  H.  Harvey  and 
Morris  H.  Goodrich,  constituting  a  quorum  of  the  Board. 

The  Secretary  presented  the  call  and  waiver  signed  by  every  mem- 
ber of  the  Board,  pursuant  to  which  the  meeting  was  held.  In  the  ab- 
sence of  objection,  the  President  ordered  the  call  and  waiver  to  be  spread 
upon  the  Book  of  Minutes  immediately  following  the  minutes  of  the  pres- 
ent meeting. 

The  President  then  reported  that  a  very  serious  accident  had  oc- 
curred at  the  Fairfield  plant,  the  boilers  in  the  power  house  having  ex- 
ploded, tearing  out  one  side  of  the  power  house  and  seriously  injuring 
three  of  the  employees  of  the  Company.  He  further  stated  that  new 
boilers  for  the  Fairfield  plant  had  been  ordered  at  least  two  months  ago 
and  that  the  old  boilers  were  only  being  used  until  they  could  be  replaced 
with  these  new  boilers.  *  *  *  He  then  called  upon  Mr.  Arthur  Hurd, 
Counsel  for  the  Company,  for  a  statement  as  to  the  legal  situation. 

Mr.  Hurd  said  that  in  his  opinion  the  injured  employees  had  a  clear 
case  against  the  Company  for  damages,  which  might  be  heavy  as  the 
boilers  were  known  to  be  in  defective  condition,  and  suggested  that  a 
settlement  out  of  the  courts  would  probably  be  politic  as  well  as  econom- 
ical. 

After  some  discussion  the  following  resolution  was  adopted  by  unani- 
mous vote : 

(See  Form  95.) 

There  being  no  further  business  before  the  meeting,  it  was  declared 
adjourned. 

William  A.  Pierce,  Morris  H.  Goodrich, 

President.  Secretary. 


Call  and  Waiver  of  Notice  appended  hereto. 

Morris  H.  Goodrich, 

Secretary. 

(See  "Meetings  of  Directors,"  Ch.  XV.) 


CHAPTER  XXXIV. 
ANNUAL  REPORTS. 


Under  the  laws  of  most  of  the  states  corporations  are 
compelled  to  make  certain  reports  to  the  authorities,  main- 
ly for  purposes  of  taxation.  Blanks  for  such  reports  are 
supplied  by  the  state  or  local  authorities  and  may  usually 
be  filled  with  but  little  trouble.  A  knowledge  of  the  tax 
laws  is,  however,  necessary  at  times  in  order  to  avoid  ex- 
cessive taxation,  and  in  all  cases  where  the  amounts  in- 
volved are  material,  legal  advice  should  be  employed  in 
the  preparation  of  these  reports.  On  account  of  their 
wide  variation  in  form  in  the  different  states,  these  tax  re- 
ports are  not  presented  here,  the  present  chapter  being 
entirely  confined  to  the  reports  made  to  the  stockholders 
at  their  annual  meeting.  The  forms  given  are  merely  sug- 
gestive, as  reports  will  necessarily  vary  with  the  condi- 
tions. 

The  usual  reports  submitted  to  the  stockholders  at 
their  annual  meeting  are  those  of  the  president  and  treas- 
urer. If  matters  of  special  interest  or  importance  have 
occurred  within  the  province  of  other  ofificials,  they  may  be 
called  upon  for  reports.  If  any  stockholders'  committees 
have  been  appointed  for  special  investigations  or  other 
purposes,  they  will  also  usually  report  to  the  annual 
meeting. 

The  president's  report  is  intended  to  give  a  general  re- 
view of  the  company's  operations  during  the  preceding 
year  and  a  statement  of  its  condition  at  the  time  of  the 
report.     (See  §§  89,  151.) 

318 


ANNUAL  RBPORTS.  319 

Form  115. — President's  Annual  Report  to  Stockholders. 

FREEMAN  HARDWARE  COMPANY. 


President's  Annual  Report. 


To  the  Stockholders  of  the 

Freeman  Hardware  Company.  : 

Gentlemen  : — It  gives  me  pleasure  to  report  that  notwithstanding 
adverse  financial  conditions,  the  present  status  of  the  Company  is  thor- 
oughly sound  and  at  least  reasonably  satisfactory.  Our  profits  have  not 
been  as  large  as  for  the  preceding  year,  the  Treasurer's  report  showing  a 
net  profit  of  $28,408.87  for  the  present  year  as  against  $56,704.83  for  the 
year  ending  January  10,  1907,  but  this  difference,  though  material,  is  fully 
accounted  for  by  the  general  financial  disturbance  which  so  seriously 
affected  the  business  of  the  Company  during  the  latter  portion  of  1907, 
and  by  a  series  of  strikes  which  occurred  among  the  employees  of  the 
Company  in  the  early  part  of  the  same  year. 

The  details  of  the  strikes  referred  to  are  already  familiar  to  most 
of  you.  They  were  primarily  brought  about  by  a  demand  that  none  but 
union  workers  should  be  employed  in  the  factories  of  this  Company, — a 
demand  which  was  refused,  as  it  would  have  resulted  in  the  discharge 
of  old  and  tried  employees  of  the  Company  with  whom  no  other  fault 
was  found  than  that  they  were  not  members  of  the  union.  In  this  posi- 
tion we  believed  then  and  still  believe  that  we  had  the  full  and  hearty 
support  of  the  stockholders  of  the  company.  The  result  was,  however, 
as  stated,  a  strike  which  seriously  crippled  the  producing  power  of  the 
Company  and  which  when  settled  broke  out  again  on  various  pretexts, 
no  less  than  three  separate  times.  The  strikes  were,  however,  finally 
brought  to  a  termination  with  some  concessions  to  the  men  as  to  hours 
but  without  relinquishment  of  the  principle  on  which  the  Company  took 
its  stand,  i.  e.  the  right  to  employ  any  capable  workman  regardless  of 
membership  or  lack  of  membership  in  a  union.  The  efTect  of  the  strikes 
was  to  reduce  the  net  earnings  of  the  Company  for  the  first  half  of  1907 
to  $15,275.25  as  against  $24,762.24  for  the  first  half  of  1906. 

The  financial  conditions  which  have  existed  for  the  larger  part  of 
the  last  six  months  of  the  fiscal  year  are  too  recent  and  too  familiar  to 
require  more  than  a  passing  reference.  The  stagnation  in  the  hardware 
trade  generally  has  been  pronounced  and  continued  and  we  believe  that 
the  showing  made  by  this  Company  will  surpass  that  of  any  other  manu- 
facturing hardware  company  of  the  United  States. 

Advantage  was  taken  of  the  enforced  leisure  caused  by  the  depres- 
sion of  business  during  the  latter  part  of  1907,  to  thoroughly  overhaul  the 
Company's  entire  plant  and  eqiiioment.  and  these  are  now  in  better  shape 
than  they  have  been  for  years.  Also  some  few  additions  have  been  made 
to  the  plant,  giving  additional  and  much  needed  room  for  our  finishing 
and  assembling  work. 

In  conclusion  I  would  state  that  the  present  outlook  for  the  Company 
is  exceedingly  favorable.  Notwithstanding  the  depression  which  still  ex- 
ists, orders  are  coming  in  at  a  satisfactory  rate,  the  Company's  plant  is 
now  operating  on  full  time  and  with  a  full  complement  of  employees,  and 
it  is  the  belief  of  the  officers  of  the  Company  that  the  year  ending  January 
10,  1909,  will  prove  one  of  the  most  prosperous  in  the  history  of  the 
Company. 

Respectfully  submitted, 

Henry  H.  Freeman, 
New  York  City,  N.  Y.,  President. 

January  10,  1908. 


320  FORMS    RElvATiNG    TO    MEJEJTINGS. 

If  the  president's  report  is  read,  it  gives  an  opportunity 
during  its  reading  or  at  its  end  for  stockholders'  questions 
and  the  explanation  of  any  points  which  are  not  entirely 
clear  in  the  report. 

Form  1 1 6. — Treasurer's  Annual  Report  to  Stockholders. 

FREEMAN  HARDWARE  COMPANY. 


TREAStniER's  Annuai.  Report. 


PROFIT  AND  LOSS  STATEMENT. 
Year  ending  January  10,  1908. 

Gross    Sales $235,125.72 

Returns  and  allowances  to  be  deducted 9,875.24 


$225,250.48 
Cost  of  Sales,  including  manufacturing,  purchase  costs,  freight, 

etc 135,154.24 


GROSS  PROFITS  FROM  SALES $90,096.24 

Deduct: 

Selling  Expenses: 

Salaries  of  sales  force $10,750.00 

Commissions    2,895.25 

Traveling    expenses 7,962.50 

Advertising    5,125.75 

Miscellaneous    items 1,250.00 


Total   Selling   Expenses $27,983.50 

General  and  Administrative  Expenses  : 

Salaries,  officers $12,000.00 

office  employees 7,500.00 

Office  supplies    785.25 

Postage    425.34 

Telephone  and  telegrams 325.40 

Depreciation    250.00 

Miscellaneous    250.74 


Total  General  and  Administrative  Expenses $21,536.73    $49,520.23 


$40,576.01 
Interest,  Discounts  and  Allov^ances  : 

Interest  on  bonds  ($100,000  at  6%) . .  $6,000.00 

Discount  on   sales $7,542.25 

"     purchases    4,125.35    3,416.90 


Net   interest   charges $9,416.90 

Allowance  for  doubtful  accounts 2,750.24    $12,167.14 


NET  PROFITS,  year  ending  Jan.  10,  1908 $28,408.87 


ANNUAI,  REPORTS.  321 

BALANCE  SHEET. 
January  10,  1908. 


Assets. 
Real  Estate: 

Land— 20  acres  at  Mahwah,  N.  J $7,500.00 

Factory  buildings  at  Mahwah,  N.  J 95,275.84 

Store  site.  New  York 80,000.00 

Building,   New   York 40,000.00    $222,775.84 

Factory  Equipment: 

Machinery    $65,249.87 

Belting,  shafting,   etc 5,742.24 

Small   tools    1,215.55        72,207.66 

Store  Equipment: 

New   York    5,742.25 

Office  Equipment: 

New  York $1,200.00 

Mahwah,    N.    J 250.00  1,450.00 

TOTAL  FIXED  ASSETS $302,175.75 

Cash  : 

In  bank   $12,725.25 

On  hand    336.25      $13,061.50 

Accounts  Receivable: 

Trade   debtors    $35,725.22 

Deduct    reserve    for    doubtful    ac- 
counts         1,250.25       34,474.97 

Notes  Receivable  16,000.00 

Inventories  : 

Finished    products    and    stock    on 

hand   $85,242.25 

Goods  in  process 18,924.25 

Raw   materials    70,262.24 

Factory  supplies    1,982.25 

Fuel    1,250.24 

Miscellaneous   small   items 1,225.35      178,886.58 

TOTAL    FLOATING    ASSETS $242,423.05 

TOTAL  OF  ASSETS $544,598.80 

Liabilities. 
Capital  Stock  : 

3,000  shares  (par  value  $100  each) $300,000.00 

Bond  Issue: 

100  bonds  (par  value  $1,000  each) 100,000.00 

TOTAL  FIXED   LIABILITIES $400,000.00 


322  I'ORMS    RElvATlNG    TO    M:eE;TlNGS. 

Accounts  Payabi,e: 

Trade  creditors    $30,724.28 

Sundry  personal  accounts 525.20 

Notes  payable   28,235.62 

TOTAL  FLOATING  LIABILITIES $59,485.10 

Surplus  : 

Balance,  Jan.  10,  1907 $56,704.83 

Net  profit— year  ending  Jan.  10,  1908. 28,408.87        85,113.70 

TOTAL  OF  LIABILITIES $544,598.80 

Respectfully  submitted, 

jAMgs  H.  Wallace, 

Treasurer. 
New  York  City,  N.  Y., 
January  10,  1908. 

The  treasurer's  annual  report  should  give  an  accurate 
presentation  of  the  financial  results  of  the  year's  opera- 
tion and  of  the  existing  financial  condition  of  the  com- 
pany. To  what  detail  it  should  extend  will  depend  en- 
tirely on  conditions.  Business  prudence  usually  forbids  a 
complete  statement  even  if  it  were  otherwise  desirable. 
(See  §  154.) 

The  treasurer's  report  is  presented  to  the  meeting  and 
is  usually  held  open  to  inspection  while  the  meeting  is  in 
progress  but  is  seldom  read  unless  it  is  short,  or  is  to  be 
specially  considered,  or  the  reading  is  requested.  In  the 
larger  corporations  the  report  is  usually  printed  for  dis- 
tribution among  the  stockholders. 

A  committee  report,  unless  of  considerable  length,  is 
usually  presented  and  read.  If  too  lengthy  to  permit  of 
this,  and  of  sufficient  importance  to  justify  the  expense,  it 
is  printed  for  distribution. 

Form  117. — Report  of  Committee  on  By-Laws. 

TERREBONNE  CEMENT  COMPANY. 
Report  oe  Committee  on  By-Laws. 

To  the  Stockholders  of  the 

Terrebonne  Cement  Company  : 
Gentlemen  : — Your  committee  appointed  at  the  last  annual  meeting 
of  the  stockholders  to  report  any  needed  modification  in  the  By-laws  of 
this   Company,  begs  to  submit  the  following: 


ANNUAL  REPORTS.  323 

(1)  We  would  recommend  the  addition  of  a  by-law  providing  for  an 
Executive  Committee,  to  consist  of  three  members  of  the  Board  of  Di- 
rectors, such  Committee  to  have  full  control  of  the  general  business 
affairs  of  the  Company  in  the  interim  between  meetings  of  the  Board. 

(2)  We  would  recommend  that  the  present  by-law  relating  to  the 
regular  meetings  of  the  Board  of  Directors  be  so  changed  as  to  provide 
for  quarterly  meetings  instead  of  monthly  meetings  as  at  present. 

(3)  We  strongly  disapprove  of  the  suggested  amendment  to  the  by- 
laws whereby  the  amount  of  indebtedness  which  may  be  incurred  by  the 
directors  on  behalf  of  the  Company  at  any  one  time  is  increased  from 
$10,000  to  $25,000,  as  we  believe  such  change  to  be  not  only  unnecessary 
but  against  the  interests  of  the  Company. 

Respectfully  submitted, 

James    F.    Gough, 
Harkness  B.  Lewis, 
OuvER  H.   Simpson, 
Committee  on  By-laws. 


PART  VIII.— MISCELLANEOUS  FORMS. 


CHAPTER  XXXV. 
NOTICES.* 


(a)  Assessment  Notices, 

The  following  form  of  mailing  notice  is  suitable  when 
subscriptions  are  payable  in  instalments  on  demand  of  the 
board.     (See  Forms  1-12.) 

Form  118. — Instalment  Notice. 

Instalment  Notice. 


HILBERT    DESK   COMPANY, 
225  Main   St.,   Grand  Rapids,  Mich. 


Mr.  Howard  BxniNS, 

Sparta,  Mich. : 
Dear  Sir — You  are  hereby  notified  that  by  due  resolution  of  the 
Board  of  Directors,  an  instalment  of  Ten  Per  Cent,  on  subscriptions  to 
the  stock  of  this  Company  has  been  called  for,  the  amount  thereof  to  be 
paid  to  the  Treasurer  of  the  Company  on  or  before  the  15th  day  of 
October,  1908. 
Grand  Rapids,  Mich.,  Henry  H.  Hilbert, 

October  1,  1908.  Treasurer. 

Shares  subscribed,  25. 

Amount  of  Assessment,  $250. 


Draw  Checks  payable  to  Treasurer. 


The  following  form  of  assessment  notice  may  be  used 
either  as  a  mailing  or  publication  notice. 

•Notices  of  corporate  meetings  are  not  considered  in  the  present  chapter  as  they 
have  already  been  discussed  in  S8  SQ,  96,  128  and  Ch.  XXIX. 

324 


NOTICES.  325 

Form  119. — Notice  of  Stock  Assessment. 

Assessment  Notice. 


BURNS  REFRIGERATING  COMPANY. 


Notice  is  hereby  given  that  assessment  No.  2  of  Fifteen  Per  Cent,  on 
the  subscribed  Capital  Stock  of  this  Company  has  been  called  for  by  due 
resolution  of  the  Board  of  Directors  and  is  payable  to  the  Treasurer  of 
the  Company  on  or  before  the  18th  day  of  September,  1908. 
Newark,  New  Jersey,  Francis  H.  Wilson, 

August  15th,  1908.  Secretary. 


Make  Checks  payable  to  Treasurer. 


In  some  states  the  directors  have  statutory  power  to 
levy  assessments  under  certain  conditions.  (See  §  76.) 
In  several  of  the  western  states  the  statutes  prescribe  the 
form  of  notice  for  such  assessments.  This  is  substantially 
as  follows: 


Form  120. — Assessment  Notice. 


RED  GULCH  MINING  COMPANY, 
Sacramento,   California. 


Notice  is  hereby  given  that  at  a  meeting  of  the  Directors  held  on  the 
10th  day  of  October,  1908,  an  assessment  of  Ten  Dollars  per  share  was 
levied  upon  the  Capital  Stock  of  the  corporation,  payable  on  the  12th  day 
of  November,  1908,  to  the  Treasurer  of  said  Red  Gulch  Mining  Company 
at  its  principal  office.  No.  584  J.  Street,  Sacramento,  Cahfornia.  Any 
stock  upon  which  this  assessment  shall  remain  unpaid  on  the  27th  day  of 
November,  1908,  will  be  delinquent  and  advertised  for  sale  at  public  auc- 
tion, and  unless  payment  is  made  before,  will  be  sold  on  the  12th  day  of 
December,  1908,  to  pay  said  delinquent  assessment  together  with  costs  of 
advertising  and  expenses  of  sale. 

John  H.  McClelland,  Secretary, 

584  J.  Street,  Sacramento,  Cal. 
October  10,  1908. 

This  notice  must  be  served  upon  each  stockholder 
either  personally  or  by  mail,  and  must  also  be  published. 

In  case  assessments  are  not  paid  when  due,  public 
notice  must  be  given  before  the  delinquent  stock  can  be 
sold.  The  statutory  form  of  notice  prescribed  in  several 
of  the  western  states  follows. 


326  Misci;ivi,ANEous  forms. 

Form  121. — Notice.     Sale  of   Delinquent  Stock.     Statu- 
tory. 

RED  GULCH  MINING  COMPANY, 
Sacramento,   California. 


Notice. 


There  is  delinquent  on  the  following  described  stock  on  account  of 
an  assessment  levied  on  the  10th  day  of  October,  1908,  the  several  amounts 
set  opposite  the  names  of  the  respective  shareholders  as  follows : 

NAME  NUMBER  OF  NUMBER  OF  AMOUNT 

CERTIFICATE.  SHARES.  DUE. 

Henry  Jones    85  25  $250 

William  Elkins  97  50  $500 

Howard  Stanford  125  30  $300 

And  in  accordance  with  law  and  an  order  of  the  Board  of  Directors  of 
this  Company  made  on  the  27th  day  of  November,  1908,  so  many  shares  of 
each  parcel  of  said  stock  as  may  be  necessary  will  be  sold  at  the  prin- 
cipal office  of  the  Company,  No.  584  J.  St.,  Sacramento,  California,  on  the 
12th  day  of  December,  1908,  at  10  o'clock  in  the  forenoon,  to  pay  de- 
linquent assessments  thereon,  together  with  costs  of  advertising  and  ex- 
penses of  sale. 

John  H.  McClelland,  Secretary, 

584  J  Street,  Sacramento,  Cal. 

A  general  form  of  assessment  notice  to  be  used  where 
the  specific  form  is  not  prescribed  by  statute,  is  as  follows: 


Form  122. — Notice.     Sale  of  Delinquent  Stock.     General. 

BURNS  REFRIGERATING  COMPANY. 


Notice  of  Sale  of  Delinquent  Stock. 


Notice  is  hereby  given  that  the  undersigned.  Treasurer  of  the  Burns 
Refrigerating  Company,  will  on  order  of  the  Board  of  Directors  and 
pursuant  to  the  statutes  in  such  case  made  and  provided,  sell  at  public 
auction  on  the  2nd  day  of  November,  1908,  at  2  o'clock  in  the  afternoon 
at  the  office  of  the  Company,  345  Broad  St.,  Newark,  New  Jersey,  Twenty 
(20)  Shares  of  the  stock  of  said  Company  now  standing  in  the  name  of 
Howard  T.  Carleton,  or  so  many  of  said  shares  as  may  be  sufficient  to 
satisfy  the  unpaid  assessment  on  said  shares  amounting  to  Three  Hun- 
dred ($300)  Dollars,  and  also  the  interest  thereon  from  the  18th  day  of 
September,  1908,  to  the  date  of  sale,  and  all  necessary  incidental  charges. 
Fifty  ($50)  Dollars  per  share  has  already  been  paid  the  Company  on 
said  stock. 

Howard  W.  Bronson, 

Treasurer. 
Newark,  N.  J., 

October  1st,  1908. 


NOTICES.  327 

(b)  Notices  of  Dividends. 

In  the  smaller  corporations  dividend  notices  are  usu- 
ally sent  by  mail  but  are  not  published.  In  the  larger  cor- 
porations they  are  almost  invariably  published  and  are 
usually  also  sent  by  mail.     (See  §  169.) 

Form  123. — Dividend  Notice.     Mailing. 

CHARLESTON  MILLING  COMPANY, 
785  Grand  St.,  New  York. 


December  1,  1908. 
Dear  Sir — You  are  hereby  notified  that  the  Directors  of  the  Charles- 
ton Milling  Company  have  this  day  declared  the  regular  semi-annual  divi- 
dend of  Three  Per  Cent,  on  the  Capital  Stock  of  the  Company,  payable 
December  15th,  1908,  to  stockholders  who  appear  of  record  at  the  close 
of  business  December  14th,  1908. 

Harry  H.  McCallum, 

Treasurer. 

If  the  transfer  books  are  closed  preparatory  to  pay- 
ment of  dividends,  the  dates  of  closing  and  reopening 
should  appear  as  in  the  following  notice,  which  may  be 
used  either  for  publication  or  for  mailing. 

Form  124. — Dividend  Notice.     Publication. 

MARTIN  FOUNDRIES  COMPANY. 


New  York,  October  1,  1908. 
Dividend  No.  25. 
The  Directors  of  the  Martin  Foundries  Company  have  this  day  de- 
clared a  quarterly  dividend  of  One  and  One-half  Per  Cent,  on  the  Capi- 
tal Stock  of  the  Company,  payable  October  30th,  1908,  to  stockholders  of 
record  at  the  close  of  business  October  10th,  1908. 

Transfer  books  will  close  October  10th,  1908,  and  reopen  October  19th, 
1908.    Checks  will  be  mailed. 

John  H.  Martin, 

Treasurer. 


When  notice  of  dividends  is  by  publication  alone,  an 
explanatory  statement  usually  accompanies  the  dividend 
check.  An  announcement  of  this  nature  used  by  some  of 
the  larger  corporations  is  given  in  the  following  form. 


328  MISC^I,I,ANEOUS    I^ORMS. 

Form  125. — Notice  Accompanying  Dividend  Check. 

MARTIN  FOUNDRIES   COMPANY. 


New  York,  October  30,  1908. 
On  October  1st,  1908,  the  Directors  declared  quarterly  dividend  No. 
25  of  One  and  One-half  Per  cent,  upon  the  Preferred  Stock  of  the  Com- 
pany, payable  this  day  to  stockholders  of  record  of  October  10th,  1908. 

In  accordance  with  permanent  order  on  file,  enclosed  please  find  check 
for  above  dividend  on  the  Preferred  Stock  standing  in  your  name.  No 
acknowledgment  is  necessary. 

Kindly  advise  John  J.  Hart,  Assistant  Secretary,  No.  575  Broadway, 
New  York,  of  any  change  in  your  address,  giving  your  old  address  as  well 
as  the  new. 

John  H.  Martin, 

Treasurer. 


Dividend  Check  enclosed  which  please  cash  immediately. 

The  following  publication  notice  is  somewhat  informal 
but  sufficient. 

Form  126. — Dividend  Notice.     (U.  S.  Steel  Corp'n.) 

UNITED  STATES  STEEL  CORPORATION. 
Dividend  No.  19  of  ^  of  1%  on  the  Common  Stock,  for  the  quarter 
ending  June   30,    1908,   was   declared  July  28,   payable   September   30,   to 
stockholders  of  record  September  9.    Transfer  books  close  at  3  P.  M. 
September  9  and  reopen  at  10  A.  M.,  October  1,  1908. 

Richard  Trimble, 

Secretary. 

This  notice  is  signed  by  the  secretary  of  the  corpora- 
tion— who  in  this  case  is  also  its  treasurer.  Usually, 
though  not  necessarily,  dividend  notices  are  signed  by  the 
treasurer. 

Form  127. — Dividend  Notice.     Common  Stock. 

Office  of 
AMERICAN   SMELTERS   COMPANY. 


No.  145  Broadway,  New  York  Citv, 
September  4,  1908. 
Quarterly  Common  Stock  Dividend  No.  17. 
The  Directors  of  the  American  Smelters  Company  have  this  day  de- 
clared a  dividend  of  Two  Per  Cent,  on  the  Common  Capital   Stock  of 
the  Company,  payable  October  15th,  1908,  to  stockholders  of  record  Sep- 


NOTICES.  329 

tember  28th,  1908.  The  books  of  the  Company  for  the  transfer  of  Com- 
mon Stock  will  be  closed  at  3  o'clock  P.  M.,  September  28th,  1908,  and 
will  be  reopened  October  2nd,  1908. 

M.  W.  Erickson, 

Secretary. 

The  following  publication  notice  covers  the  dividend 
on  both  common  and  preferred  stock.  This  inclusion  is 
not  in  any  way  objectionable,  but  at  times,  for  the  sake  of 
greater  emphasis  and  publicity,  a  separate  notice  for  each 
dividend  is  preferred. 

Form  128.     Dividend  Notice.      Common  and  Preferred 
Stock. 

McKINNEY   COMPANIES. 


The  regular  quarterly  dividend  of  One  Per  Cent,  on  the  Preferrefl 
Shares  and  the  regular  quarterly  dividend  of  One  Per  Cent,  on  the  Com- 
mon Shares  in  the  McKinney  Companies  will  be  paid  January  2nd,  1909, 
to  shareholders  of  record  as  they  appear  at  the  close  of  business  Decem- 
ber 14th,  1908. 

The  transfer  books  will  be  closed  for  four  days  only,  December  15th, 
16th,  17th  and  18th,  1908. 

Horace  C.  King, 

S  c  c  rets  r  V 
Dated  November  27,  1908. 


Form  129. — Dividend  Notice.    Mailing  Orders  Requested. 

SOUTHERN  PACIFIC  CO., 
120  Broadway,  New  York,  November  11,  1908. 
Dividend  No.  9. 
A  dividend  of  Three  and  a  Half  Per  Cent.  ($3.50  per  share)  was  this 
day  declared  on  the  Preferred  Stock  of  the  Southern   Pacific  Company, 
payable  on  demand  on  and  after  the  15th  day  of  January,   1909,  to  the 
stockholders  of  record  at  3  o'clock  P.  M.  on  Thursday,  December  31,  1908. 
The  stock  transfer  books  will  not  be  closed  for  the  payment  of  this  divi- 
dend. 

Stockholders  who  have  not  already  done  so  are  requested  to  file  mail- 
ing orders  for  dividends  with  the  undersigned,  from  whom  blank  orders 
can  be  had  on  application. 

A.  K.  Van  Devienter, 

Treasurer. 

The  mailing  order  referred  to  in  the  foregoing  divi- 
dend notice  is  shown  on  the  following  page.  The  form 
as  given  is  an  exact  reproduction  of  the  original. 


330  MISCELI/ANEOU.S    FORMS. 

Form  130a. — Mailing  Order  for  Dividends.     Face. 


£d 


Q  ^  «e 
K  U   Si  9< 

-o  «  t" 
u  u  >.•' 

Q   E  -So 


•sg. 
5s. 


Tq  the  Treasurer vf  SOUTHERN  Ptmf\Q  COMPANY, 

t20  Broadway,  irtntf  York,  V,  V^ 
tMtil  thit  order  ahaliie  revoked  t»  writing,  pUase  fend  ty  mail,  in  ehequt  WkyaiU 

to  the  order  of 


in  envelope 

addressed  a,s 

follows  t 
(Please  write 
distinctly.)    J 


"*'"      '""ii'AiieTiB"so  W'tNvtioJ>2**"  " 


City  ph  fowN  *no  »T/>Tfc 
all  dividends  now  due,  Or  which  mdy  hereafter  hecome  due,  on  alt  Stock  now  standing,  of 
■which  may  hereafter  stand,  on  the  hookt  Of  your  Company  in name. 


(J>ttte) 


Slin  here 

name  ap- 
peara  on 
certiScate. 


83^  Whsn  cheque  is  to  be  made  payable  to  other  than  the  signer,  signature  of  the  Utter  MUST  be  acknowkdge^ 
before  a  Notary  Public  on  the  back  of  this  order,  and,  if  signed  by  an  Attorney,  Administiaior,  Executor,  Guardian 
or  Trustee  it  UUST  be  accompanied  by  utiaftctory  evidence  of  the  signer'>  capacity.  iSmmSSi 


On  the  back  of  this  mailing  notice  appears  form  for 
notarial  acknowledgment  as  follows : 

Form  130b. — Mailing  Order  for  Dividends.     Reverse. 


NOTARIAL  ACKNOWLEDGMENT  OF  SIGNATURE    IS  REQUIRED  ONLY  WHEN 
CHEQUE    IS   TO   BE    MADE    PAYABLE  TO  OTHER  THAN.  THE  SIGNER. 


^t»«ff:.. 

,.-..»...  0/.„.., 
Vounty  of- 


'Notarial  acicnowledgment  will  not  be  required  on  dividend  orders  request- 
ing cheques  to  be  made  payable  to  any  welUknown  Trust  Company,  Bank 
or  Bankers,  as  'follows: 
*' (Name  of  Bank) .for  a/c  of. (Name  of  Stockholder). .. . ..." 


On  this....,,...^. day  of. in  the  year 

VHithm9anihin*hun4reda]t4i -....-. .before  me  personally  eume......... - 

„.^.., _, _ _„ ,,, ,    to  me  knov)n,  and  known  to  me  to  be 

the  individual  described  in,  and  who  exeeuted  the  joithin  instrument  and - acknowledged 

'V%at.l..._ exeeuted  the  same. 


ATTESTING     0PPKS9 
lUST   IMPRESS  HtS  SEAU 


N.  •.     IT  ACRHOWLCOaCD  OUT  OP  THE  UNITCD  ST«T«  MCH  AeHNOWLCOaMINT  MUST  BC   MADE  ■CfOKC   AN  AMERICAN 
OIPtOMATie  ON  CONSULAR  OFPICER.  iS£SSi 

(c)  Notices  of  Appointment. 

When  an  election  is  held,  it  devolves  upon  the  secre- 
tary to  notify  the  officials-elect. 


NOTICES.  331 

Form  131. — Notice  of  Election  as  Director. 

ORVELLE   MACHINE   WORKS, 
Trenton,  New  Jersey. 

December  10,   1908. 
Mr.  George  W.  BromlEigh, 
236  Greenwood  Ave., 

Trenton,  N.  J.: 
Dear  Sir — You  are  hereby  notified  that  at  the  annual  meeting  of  the 
Orvelle  Machine  Works  held  this  day,  you  were  elected  a  member  of  its 
Board  of  Directors. 

The  next  regular  meeting  of  the  Board  will  be  held  in  the  office  of 
the  Company,  January  5,  1909,  at  3  o'clock  P.  M.,  for  the  election  of  offi- 
cers and  for  the  transaction  of  such  other  business  as  may  come  before 
the  meeting. 

You  are  requested  to  be  present  and  participate  in  that  meeting. 
Respectfully, 

Martin  B.  Hereford, 

Secretary. 

Usually  before  the  election  of  a  director  those  inter- 
ested assure  themselves  that  he  will  serve  if  elected.  In 
such  case  the  notification  need  not  ask  his  acceptance  of 
the  position.  If,  however,  there  is  any  uncertainty  the 
notification  of  election  should  request  a  formal  acceptance 
of  the  position.  If  the  director-elect  refuses  to  accept,  his 
election  is  void,  as  he  cannot  be  forced  into  office  against 
his  will. 

Form  132. — Notice  of  Election  as  Director.     Acceptance 
Requested. 

BLACK  DIAMOND  DRILL  COMPANY, 
23   State    St.,   Boston,   Massachusetts. 


October  10th,  1908. 
Mr.  Horace  H.  Fleming, 
1716  State  St., 

Boston,  Mass. : 

Dear  Sir — At  a  meeting  of  the  Directors  of  this  Company  held  this 

10th  day  of  October,  1908,  you  were  elected  a  member  of  the  Board  to 

fill  the  vacancy  caused  by  the  death  of  Mr.  Frederick  Colwell.     Will  you 

kindly  indicate  your  acceptance  of  the  position  at  your  early  convenience. 

Respectfully, 

SiMRELL  B.  Ives, 

Secretary. 


332  MISCELI^ANEOUS    FORMS. 

As  a  rule  when  corporate  officials  are  elected,  either 
the  officers-elect  are  present  at  the  meeting  at  which  their 
election  occurs,  or  are  in  such  close  personal  touch  with 
the  corporate  proceedings  that  formal  notice  of  their  elec- 
tion is  unnecessary.  If,  however,  a  stranger  is  elected  to 
an  official  corporate  position,  notice  must  be  given. 

Form  133. — Notice  of  Election  as  General  Manager. 

\ 

WILLIS  OIL  WELL  COMPANY, 
265  Madison  Avenue,  New  York. 


October  1st,  1908. 
Mr.  Henry  P.  Simpson, 

445  Greenwood  Ave., 

Newark,  New  Jersey: 
Dear  Sir — At  a  meeting  of  the  Board  of  Directors  of  this  Company 
held  this  day,  you  were  elected  General  Manager  of  the  Company  at  a 
salary  of  Twenty-four  Hundred  Dollars  per  annum,  payable  in  monthly 
instalments  of  Two  Hundred  Dollars  each,  your  employment  and  duties 
to  begin  on  the  15th  day  of  October,  1908,  and  the  first  instalment  of  your 
salary  to  be  due  and  payable  on  the  15th  day  of  the  following  month. 

Will  you  kindly  notify  me  without  delay  of  your  acceptance  of  the 
position  and  report  for  duty  on  the  day  above  designated. 

Yours  very  truly, 

GERAI.D  E.  Conway, 

Secretary. 

If  it  is  doubtful  if  the  party  elected  will  accept  the  posi- 
tion, his  appointment  and  notice  thereof  are  usually  made 
tentative  as  in  the  following  example. 

Form  134. — Tender  of  Position.     Sales  Manager. 

HOWARD   DESK   COMPANY, 
25  Stone  St.,  New  York. 


October  30,  1908. 
Mr.  WiLUS  H.  Wawers, 

225  Broadway,  New  York : 
Dear  Sir — I  am  instructed  by  the  Board  of  Directors  to  tender  you 
the  position  of  Sales  Manager  of  this  Company  at  a  salary  of  $1,800  per 
annum,  payable  in  monthly  instalments  of  $150  each,  your  employment 
and  duties  to  begin  in  case  of  your  acceptance,  on  the  10th  day  of  No- 
vember, 1908. 

Your  early  action  in  the  matter  will  greatly  oblige. 
Yours  very  truly, 

Sherwin  F.  HamiIvTon, 

Secretary. 


CHAPTER    XXXVI. 
FORMS  OF  RESIGNATIONS. 


Resignations  may  be  divided  into  two  general  classes 
— those  which  are  so  phrased  as  to  be  completely  effective 
without  an  acceptance,  which  may  be  termed  peremptory 
resignations,  and  those  which  are  tentative  in  their  nature 
and  therefore  not  effective  until  accepted.  (See  §§  113, 
149.)     The  following  form  is  of  the  latter  nature. 

Form  135. — Resignation  of  Director. 

To  the  Board  of  Directors  of  the 
Howard  Scale  Company: 
Gentlemen — On  account  of  my  continued  ill  health,  which  prevents 
my  proper  attention  to  the  duties  of  the  position,   I  hereby  tender  my 
resignation  as  a  member  of  your  body. 

Very  respectfully, 

Henry  H.  GalE. 
New  York  City, 

September  30,  1908. 

If  a  resignation  of  this  kind  is  accepted  without  quali- 
fication, its  effect  is  immediate  and  the  resigning  director, 
though  present  at  the  meeting,  ceases  to  be  a  director  at 
the  moment  the  resolution  or  motion  of  acceptance  is 
adopted.  If  it  is  desired  to  avoid  this,  acceptances  may  be 
phrased  "to  take  effect  at  the  close  of  the  meeting."  It 
may  be  noted  in  this  connection  that  a  director  retiring 
by  resignation  can  not  legally  vote  on  his  own  successor. 
The  vacancy  does  not  exist  until  his  resignation  is  effec- 
tive and  thereafter  he  is  not  a  director. 

Dummy  directors  are  sometimes  elected  to  fill  a  posi- 
tion or  vacancy  in  the  board  until  a  permanent  incumbent 

333 


334  MISCElvIvANiEOUS    I^ORMS. 

is  elected.  In  such  case  the  dummy  director's  resignation 
in  tentative  form  is  usually  secured  at  the  time  of  his  elec- 
tion and  is  placed  on  file.  Then  when  a  suitable  person 
for  permanent  director  has  been  found,  the  resignation 
on  file  is  accepted  and  the  successor  is  at  once  elected. 
The  following  form  of  resignation  is  commonly  used  under 
such  circumstances. 

Form  136. — Resignation  of  Director.      Effective  on  Ac- 
ceptance. 

To  the  Board  of  Directors  of  the 

Harvard  Pubushing  Company: 
Gentlemen — I  hereby  tender  my  resignation  as  a  member  of  your 
body,  to  take  effect  upon  acceptance. 

Respectfully, 

Frank  McClelland, 
New  York  City, 

September  1st,  1908. 

This  resignation  holds  good  until  acceptance  or  until 
the  party's  term  as  director  expires,  unless  sooner  with- 
drawn. If  the  party  is  again  elected  as  a  director,  his  old 
resignation  is  of  no  further  effect  and  must  be  renewed  if 
his  same  uncertain  tenure  of  of^ce  is  to  be  maintained. 
It  must  be  remembered,  however,  that  a  party  tendering 
such  a  resignation  has  the  right  to  withdraw  it  or  to  re- 
voke it  at  any  time  prior  to  its  acceptance. 

The  final  clause  of  the  foregoing  resignation,  while  con- 
ventional, is  of  no  direct  effect.  A  "tendered"  resignation 
cannot  take  effect  until  accepted. 

Form  137. — Resignation  of  Director.     Peremptory. 

To  the  Board  of  Directors  of  the 

Franklin  Electric  Corporation  : 
Gentlemen — I  hereby  resign  my  position  as  a  director  of  the  Frank- 
lin Electric  Corporation,  my  resignation  to  take  immediate  effect. 

Respectfully, 

William  H.  Collins. 
New  Brighton,  Pa., 

October  22,  1908. 


RESIGNATIONS.  335 

This  resignation  terminates  the  official  status  of  the 
party  signing  same  as  soon  as  the  document  is  filed  with 
the  secretary  of  the  company.  No  action  of  the  board  is 
required  nor  can  the  board  in  any  way  prevent  its  effect. 
This  peremptory  form  of  resignation  is  often  employed  in 
cases  where  a  director  wishes  to  escape  responsibility  for 
some  proposed  action  of  the  board  or  wishes  to  express 
his  disapproval  of  some  board  action.  It  does  not  relieve 
him  from  any  responsibility  for  past  actions  but  does  re- 
lieve him  from  responsibility  for  any  future  board  actions. 

A  resignation  may  be  made  effective  at  a  future  date  as 
in  the  following  form.  The  object  of  such  a  deferred 
resignation  is  usually  to  give  time  for  the  selection  of  a 
suitable  successor. 

Form  138. — Resignation  of  Director.     Future  Date. 

1 ; 

To  the  Board  of  Directors  of  the 
CooPERSTowN  Tannery  : 
Gentlemen — I    hereby    resign    my    membership    in    your    body,    such 
resignation  to  be  effective  October  21,  1908. 

Respectfully, 

Howard  McCali,. 
Cooperstown,  New  York, 
October  1st,  1908. 

When,  as  occasionally  happens,  some  difficulty  has 
arisen  between  the  directors  and  an  official,  and  this  latter 
wishes  a  vote  of  confidence  or  an  expression  of  the  feel- 
ing of  the  board  towards  him,  he  will  hand  in  a  tentative 
resignation  as  in  the  following  form. 

Form  139. — Resignation  of  President.     Conditional. 

To  the  Board  of  Directors  of  the 

Standard   Milling   Company  : 
Gentlemen — I  hereby  tender  my  resignation  as   President  and  Di- 
rector of  your  Company  and  request  your  immediate  action  thereon. 

Very  respectfully, 

HSNRY  H.  Maxwell. 
Franklin,  Pa., 

November  2nd,  1908. 


336  misce;li,aneous  forms. 

If  a  majority  of  the  board  wish  to  retain  the  president, 
they  either  vote  that  the  resignation  be  not  accepted  or 
vote  against  a  motion  for  its  acceptance.  In  either  case 
the  president's  resignation  is  of  no  effect  and  the  incident 
is  merely  an  endorsement  of  him  and  his  position.  If, 
however,  those  opposed  to  the  president  are  a  majority 
and  accept  the  resignation,  his  official  connection  with  the 
company  is  peremptorily  terminated. 

A  more  friendly  resignation  is  given  in  the  following 
form. 

Form  140. — Resignation  of  Treasurer. 

u.^ 

New  York,  October  28th,  19aS. 
To  the  Board  of  Directors  of  the 
Otis   Machine   Company, 

43  Dey  St.,  New  York: 
Gentlemen — I  am  offered  the  position  of  Treasurer  of  the  Los 
Angeles  Fruit  Company  of  Los  Angeles,  California,  and  on  account  of 
the  condition  of  my  health  am  very  desirous  of  accepting  the  same.  I 
therefore  hereby  tender  my  resignation  as  Treasurer  of  the  Otis  Machine 
Company  and  ask  your  acceptance  of  same  at  the  earliest  possible  date. 
I  would  also  request  the  early  appointment  of  a  committee  to  audit  my 
accounts  and  the  due  authorization  of  my  successor  to  take  over  and 
receipt  for  the  moneys  and  other  property  of  the  Company  now  in  my 
charge. 

Regretting  the  termination  of  my  pleasant  official  relations  with  the 
Company  and  thanking  you  for  the  uniformly  kind  consideration  ac- 
corded me  by  your  body,  I  remain, 

Respectfully, 

James  H.  McDonald. 

Resignations  and  other  communications  for  the  board 
of  directors  are  frequently  addressed  to  the  secretary  or 
even  to  the  president  of  the  company.  The  better  practice 
is  to  address  the  communication  to  the  board  enclosing  it 
in  an  envelope  addressed  to  the  secretary  or  the  president 
of  the  company,  as  the  case  may  be.  It  is  then  the  duty  of 
the  officer  receiving  the  communication  to  present  it  to 
the  board.  Such  service  on  or  delivery  to  the  president 
or  secretary  is  legally  sufficient.     (See  §§  113,  149.) 


CHAPTER  XXXVII. 

FORMS    OF    CORPORATE    AND    OFFICIAL 
SIGNATURES. 


The  signature  of  a  corporate  official  followed  by  his 
official  designation  is  usually  referred  to  as  an  "official" 
signature.  (Forms  141,  142.)  The  name  of  a  corpora- 
tion duly  affixed  and  evidenced  by  the  signature  of  the 
affixing  officer  or  officers  is  known  as  a  "corporate"  sig- 
nature.    (Form  143.) 

Speaking  generally,  the  corporate  signature  is  affixed 
to  all  important  instruments  by  which  the  corporation  it- 
self is  to  be  directly  and  legally  obligated,  while  the  offi- 
cial signatures  are  employed  by  the  corporate  officials  in 
matters  pertaining  particularly  to  their  respective  depart- 
ments, in  which  the  contract  relations  of  the  corporation 
do  not  enter  in,  or,  if  otherwise,  the  authority  of  the  officer 
signing  is  sufficient  to  sustain  his  action. 

Thus  the  president  signs  reports,  letters,  instruments, 
etc.,  with  his  official  signature;  the  treasurer  signs  notices 
of  dividends  or  assessments,  financial  statements  and  even 
corporate  checks  and  reports  in  the  same  manner;  while 
the  secretary  affixes  his  official  signature  to  the  minutes  of 
meetings,  to  reports,  notices,  certificates,  etc. 

In  regard  to  letter  signatures,  practice  varies  widely. 
In  perhaps  the  majority  of  corporations  the  corporate  sig- 
nature is  attached  to  every  letter  pertaining  to  the  busi- 
ness of  the  corporation  unless  there  is  some  special  reason 
for  a  different  signature.     In  many  corporations,  however, 

337 


338  MISC^lvI/ANEOUS    FORMS. 

this  practice  is  exactly  reversed,  the  official  signature  of 
the  writer  being  always  employed  unless  there  is  some 
special  reason  for  the  corporate  signature.  The  former 
is  the  preferable  plan. 

Form  141. — Official  Signature.     Informal. 

' • V  • 

Joseph  H.  McPhErson, 

President. 

This  is  the  simplest  form  of  official  signature.  It 
should  only  be  used  when  the  letter  or  other  instrument 
to  which  it  is  appended,  shows  plainly  and  unmistakably, 
by  heading  or  subject  matter,  of  what  company  the  person 
signing  is  an  official.  If  this  is  not  the  case,  the  official 
signature  should  be  written  in  full  as  in  the  following 
form. 

Form  142.     Official  Signature.     Formal. 

Joseph  H.  MacPherson, 

President  Holland  Typewriter  Co. 

The  following  corporate  signature  is  in  its  simplest 
form. 

Form  143. — Corporate  Signature. 

(1)  Ramsay  Water  Company, 
By 

President. 

(2)  Ramsay  Water  Company, 
By  Howard  Ramsay, 

President. 

The  first  of  these  forms  shows  a  partial  corporate  sig- 
nature— usually  affixed  by  means  of  a  rubber  stamp — 
awaiting  completion  by  the  insertion  of  the  president's 
signature  as  shown  in  the  second  form. 

The   word   "By"   as   given   in   the   preceding   form   is 


CORPORATE   AND    OFFICIAL    SIGNATURES.  339 

sometimes  omitted  from  the  corporate  signature.  The 
word  is,  however,  employed  by  a  majority  of  the  best  con- 
ducted corporations  of  the  country  and  its  omission  may,' 
under  some  circumstances,  involve  the  officer  whose  name 
is  affixed  in  a  personal  liability.  (See  comment  preced- 
ing Form  i6i.)  The  form  as  given  is  therefore  regarded 
as  distinctly  preferable. 

When  the  corporate  signature  is  affixed  to  important 
instruments,  usually,  though  not  necessarily,  two  or  more 
official  signatures  are  employed.  The  seal  is  also  usually 
affixed  even  when  not  legally  necessary,     (See  §  153.) 

Form  144. — Corporate  Signature.     Formal. 

Western   Chemical  Company, 
By  Joseph  H.  McClEary, 
I  CORPORATE  \  President. 

\     SEAL.       J  Frederick  Wellman, 

Secretary. 

The  corporate  signature  may  be  legally  affixed  by  any 
corporate  official  or  agent  authorized  thereto  by  the  di- 
rectors or  by-laws.  In  all  current  business,  however, 
where  but  one  signing  officer  is  desired,  the  president  is 
usually  designated,  unless  the  transaction  pertains  spe- 
cially to  the  department  of  some  other  official. 

When  the  secretary's  name  is  employed  in  a  corporate 
signature,  as  in  the  foregoing  form,  no  specific  attestation 
of  the  seal  is  usual  or  necessary.  If  otherwise  the  seal 
should  be  formally  attested  as  in  the  following  form  which 
gives  the  corporate  signature  usually  employed. 

Signatures  affixed  to  formal  instruments  are  customar- 
ily preceded  by  an  explanatory  statement  termed  a  "tes- 
timonium clause." 

Form  145. — Testimonium  Clause.     Corporate  Signature. 
Seal  Attested. 

In  Witness  Whereof,  the  said  Powell  Steel  Company 
has  caused  its  corporate  name  to  be  hereunto  sub- 


340  MISCEl*I<AN^OUS    FORMS. 

scribed  by  its  President  and  its  duly  attested  corpo- 
rate seal  to  be  hereunto  affixed  by  its  Secretary,  all 
in  the  City  of  Hartford,  State  of  Connecticut,  on  the 
2Sth  day  of  August,  1908. 
/CORPORATE  \  Powell  Steel  Company, 

I     SEAL.       J  By  Alexander  H.  McDowell, 

President. 
Attest  seal: 

Franklin  B.  Lord, 

Secretary. 

The  following  is  a  convenient  form  of  testimonium 
clause  when  the  instrument  is  to  be  signed  by  two  or  more 
corporations. 

Form  146. — Testimonium  Clause.     Two  Corporate  Sig- 
natures. 


In  Witness  WhErEoe,  the  said  parties  of  the  first  and 
second  parts  have  caused  their  respective  corporate 
signatures  and  seals  to  be  hereunto  affixed  by  their 
duly  authorized  officers,  in  the  City,  County  and 
State  of  New  York,  on  the  day  and  year  first  above 
written. 
("corporate  \  Arlington  Brass  Works, 

I     seal.        i  By  Henry  BriErly, 

President. 
Attest  seal: 

John  H.  Savage, 

Secretary. 
/corporate  ■)  Newark  Castings   Company, 

\     seal.       J  By  Horace  D.  Powers, 

President. 
Attest  seal: 

Henry  M.  Sunthein, 

Secretary. 

A  more  formal  testmonium  clause  for  a  corporate  and 
individual  signature  is  as  follows: 

Form  147. — Testimonium   Clause.     Corporate   and   Indi- 
vidual Signatures. 

In  Witness  Whereof,  the  Little  Falls  Carpet  Company, 
said  party  of  the  first  part,  has  caused  its  corporate 
seal  to  be  affixed  to  this  indenture  and  its  corporate 
signature  to  be  subscribed  hereunto  by  its  President 
and  Secretary  duly  authorized  thereunto,  and  the  said 


CORPORATE    AND   OFFICIAL    SIGNATURES.  341 

Harrison  H.  Spellman,  party  of  the  second  part,  has 
affixed  his  signature  and  seal  hereunto,  all  being  done 
in  the  City  of  Trenton,  State  of  New  Jersey,  on  the 
day  and  year  first  above  written, 
f  CORPORATE  "1  Little  Falls  Carpet  Company, 

I     SEAL.       j  By  Willis   H.   Shelley, 

President. 
James  H.  McClelland, 

Secretary. 
Harrison  H.  SpEllman.        [L.  S.] 

If  a  contract  is  signed  by  an  agent,  the  corporate  seal 
is  not  usually  affixed.  The  testimonium  clause  in  such 
case  might  be  as  follows: 

Form  148. — Testimonium  Clause.     Signature  Affixed  by 
Agent. 

In  Witness  Whereof,  the  said  Milton  Smelting  Cor- 
poration, party  of  the  first  part,  acting  through  its 
duly  appointed  agent,  Mortimer  H.  Shepherd,  au- 
thorized thereunto  by  resolution  of  its  Board  of  Di- 
rectors (certified  copy  of  which  resolution  under  the 
corporate  seal  is  hereunto  annexed),  has  caused  its 
corporate  signature  to  be  hereunto  affixed,  and 
Samuel  Jaros,  party  of  the  second  part,  has  here- 
unto affixed  his  signature  and  seal,  all  on  the  day  and 
year  first  above  written. 

Milton  Smelting  Corporation, 

By  Mortimer  H.  Shepherd, 

Agent. 

Samuel  Jaros.    [L.  S.] 

A  copy  of  the  resolution  which  authorizes  the  agent  to 
execute  the  instrument  on  behalf  of  the  corporation,  duly 
certified  under  the  corporate  seal,  should  be  attached  to 
the  instrument,  thus  making  the  evidence  of  its  proper 
execution  complete.  (See  also  testimonium  clauses  of 
Forms  163,  164,  179-189.) 


CHAPTER  XXXVIII. 
FORMS  OF  CHECKS,  RECEIPTS  AND  NOTES. 


(a)  Corporate  Checks. 

The  form  of  signature  to  a  corporate  check  is  not 
material.  Its  purpose  is  merely  to  identify  and  authenti- 
cate the  instrument,  and  any  signature  duly  prescribed  by 
the  by-laws  or  by  resolution  of  the  directors  and  recog- 
nized by  the  company's  bank  is  sufficient.  Consequently 
— while  the  corporate  signature  is  usually  to  be  preferred 
— there  is  in  practice  much  variation  as  shown  in  the  forms 
which  follow. 

The  corporate  seal  is  seldom  if  ever  used  on  corporate 
checks,  though  its  use  does  not  affect  the  check  in  any 
way.  When  the  corporate  funds  are  material  in  amount, 
the  name  of  two  officials  are  usually  required  upon  the 
check. 

The  forms  of  check  which  follow  are  in  common  use. 

Form  149. — Check.     Corporate  Signature. 


o 
O 


^ 


No.  1754  New  York,  August  1,  1908. 

SEABOARD  NATIONAL  BANK 
of  the  City  of  New  York. 

Pay  to  the  order  of  John  H.  Wilkins $425.75 

Four  Hundred  and  Twenty-Five 75/100  Dollars. 

Standard  Radiator  Company, 

Samxjei,  S.  Steigei,, 

President. 

Stewart  H.  Wii,son, 

Treasurer. 

342 


CHECKS,  RECEIPTS  AND  NOTES.  343 

Frequently  the  number  is  placed  in  the  upper  right- 
hand  corner  of  a  check,  the  date  line  coming  in  above  or 
below.  Such  an  arrangement,  with  the  other  details  as 
shown  in  the  form  given,  is  highly  approved  by  bank  offi- 
cials, as  it  brings  the  essential  features  of  the  check — num- 
ber, date,  amount,  payee  and  signature — all  well  over  to 
the  right-hand  side  of  the  check  in  the  most  convenient 
position  for  rapid  reference. 

If  the  by-laws  or  a  directors'  resolution  require  that 
the  corporate  name  be  affixed  by  the  treasurer  and  the 
check  be  countersigned  by  the  president,  as  is  frequently 
the  case,  the  following  form  is  approved. 

Form  150. — Check.     Countersigned. 


SI 

S  P 


n 


No.  244.  New  York,  September  8,  1908. 

STANDARD  NATIONAL  BANK 
of  the  City  of  New  York. 

Pay  to  the  order  of  Howard  P.  Huntington $475.00 

Four  Hundred  and  Seventy-Five  no/100 Dollars 

Countersigned:  MerrivalE  Coai.  Company, 

James  J.  McLane,  By  Horace  P.  Wisner, 

President.  Treasurer. 


Where  the  official  signatures  of  the  treasurer  and  the 
president  are  affixed,  the  form  is  usually  as  follows: 

Form  151. — Check.     Official  Signatures. 

I- 

:  6-^   :No.  1582.  New  York,  October  1,  1908. 

[  S^^  :  THE  PEOPLE'S  NATIONAL  BANK 

\   ^tn  '-  of  New  York. 

:    g'S   -Pay  to  the  order  of  Jesse  Claire $125.45 

\  ^^   iOne  Hundred  and  Twenty-Five  45/100 Dollars 

'•   S^   :  Wallace  McCoMB,  Perry  H.  Ducroix, 

:  t2to   :  President.  Treasurer. 


344  MISCELIvANEOUS    FORMS. 

Form  152. — Check.     Official  Signatures.     Purpose  Stated. 

:  ^   J  No.  745.                                                 New  York,  October  1,  1908. 

:  6;2   :                                 BANK  OF  MANHATTAN 

\  tt   \                                        of  New  York  City. 

:  ^^   :Pay  to  the  order  of  James  &  Oliver $125.75 

\   gJ"  :One  Hundred  and  Twenty-Five 75/100   Dollars. 

:    §  g   •  Rudolf  Hessler, 

:    g.S   jIn  full  for  President. 

:    wW  j        September  printing.  Jasper   H.    McMeis, 

:  ^KJ   :                                                                                                 Treasurer. 
CO    • 

There  is  no  objection,  legal  or  practical,  to  the  entry 
on  a  check  of  the  purpose  for  which  it  is  issued,  if  so 
placed  as  not  to  obscure  or  interfere  with  its  essential 
details.  The  advantage  in  the  use  of  such  a  check  is  ap- 
parent. Duly  endorsed,  as  it  must  be  before  payment  is 
made,  the  check  itself  affords  the  best  possible  evidence 
of  the  settlement  effected  thereby,  and  saves  the  expense 
and  trouble  of  a  more  formal  receipt. 

Checks  of  this  nature  range  from  the  very  simple 
form  of  receipt  check  given,  up  to  elaborate  voucher 
checks  of  blanket  sheet  dimensions,  containing  a  detailed 
statement  of  the  entire  account  in  payment  of  which  the 
check  is  drawn. 

A  form  of  check  much  in  favor  because  of  the  promi- 
nence given  to  the  name  of  the  issuing  corporation,  is  as 
follows : 

Form  153. — Check.     Draft  Form. 

> ' 

ALLIS-WILKINS  COMPANY, 
1675    Broadway,    New   York. 
No.  1728.  August  15,  1908. 

Pay  to  the  order  of  Jesse  H.  Sinclair $35.25 

Thirty-Five 25/100  Dollars. 

AlIvIS-Wilkins  Company, 
By  Francis  H.  Whitman, 
To  the  Treasurer. 

Seaboard  National  Bank, 
New  York. 


CHECKS,  RECEIPTS  AND   NOTES.  345 

In  the  smaller  corporations  dividends  are  usually  paid 
by  means  of  the  ordinary  corporate  check,  the  words 
"Dividend  Check"  being  stamped  or  w^ritten  across  its 
face.  (See  §  i68.)  In  the  larger  corporations  special 
checks  are  employed  for  the  purpose,  as  in  the  following 
form : 

Form  154. — Dividend  Check. 


o     . 


AMERICAN  WOOL  EXPORT  COMPANY, 

New  York,  August  31,  1908.  No.  1482. 


AMERICAN  NATIONAL  BANK 

of  New  York. 

Pay  to  the  order  of 

Henry   H.    McCall $125.00 

One  Hundred  and  Twenty-Five 00/100  Dollars. 

Countersigned : 

Stock  Transfer  Department. 
John  FrEnckel,  Transfer  Agent.  Frank  S.  Jordan, 

Treasurer. 


No  receipt  is  usually  required  when  this  form  of  divi- 
dend check  is  employed,  the  duly  endorsed  check  in  itself 
affording  the  best  possible  evidence  of  payment  of  the 
dividend. 

The  ordinary  endorsement  of  a  corporate  check  is 
given  in  the  following  form. 

Form  155. — Endorsement  of  Corporate  Check. 


;z;  H  3 

O  (I4 

8 
> 


346  misce;i,i,ane;ous  forms. 

This  endorsement  is  usually  affixed  by  the  treasurer 
or  cashier,  though  the  president  is  frequently  authorized 
thereto. 

The  following  form  of  endorsement  is  usually  affixed 
in  its  entirety — corporate  name,  official  signature  and  all 
— with  a  rubber  stamp.  Such  an  endorsement  is  ap- 
proved by  the  banks  and,  on  account  of  the  rapidity  and 
convenience  with  which  it  may  be  affixed,  is  generally 
employed. 

Form  156. — Endorsement  of  Check  for  Deposit. 

•5  W  Ph  <u 
,^  S  S  « 

°  2  ^  w 

to  iJ  w 

The  following  is  a  common  form  of  corporate  draft. 
Form  157. — Corporate  Draft. 

No.  745.  New  York,  October  1,  1908. 

Three  days  after  sight  pay  to  the  order  of 

Seaboard  National  Bank  of  New  York $1,245.25 

Twelve   Hundred  and   Forty- Five  25/100 Dollars 

payment  of  account  as  per  our  statement  of  September  1st,  1908. 
Value  received.    Charge  same  to  account  of 

Car  Equipment  Company, 
By  Howard  Jambs, 
To  North  Wheeling  Car  Co.,  Treasurer. 

Wheeling,  West  Virginia. 

(b)  Corporate  Receipts. 

A  common  form  of  corporate  receipt  is  as  follows : 


CHECKS,  RieCElPTS  AND  NOTES.  347 

Form  158. — Corporate  Receipt. 

:    <     ^'   :    $250.00  New  York,  July  15,  1908. 

Received  from  Edward  M.  Blair  Two  Hundred  and  Fifty 
Dollars,  rental  of  Store  at  No.  65  Vesey  St.  for  September. 


{-"     r 
M  o   li 

o^.g   :  Metropolitan  Realty  Company, 


<u 


By  Samuel  F.  Watkins, 
«     in   :  Treasurer. 


^ 


It  would  seem  preferable  that  all  receipts  for  money- 
received  by  a  corporation  should  be  given  in  the  corporate 
name.  In  practice,  however,  corporate  receipts  are  com- 
monly signed  by  the  treasurer.  In  such  case  the  name  of 
the  corporation  should  appear  prominently. 

Form  159. — Corporate  Receipt.     Official  Signature. 

$725.25  September  15,  1908. 

WELLMAN  SUPPLY  CORPORATION, 
265  Chambers  St.,  New  York. 
Received  from  the  Jackson  Hardware  Company  Seven  Hundred  and 
Twenty-five  25/100  Dollars  in  full  of  account. 

H.    J.    ASHTON, 

Treasurer. 

The  larger  corporations,  when  dividends  are  to  be  paid, 
employ  dividend  checks  (See  Form  154),  which  when 
properly  endorsed  and  deposited,  are  usually  regarded  as 
all  sufficient  receipts.  If,  however,  formal  receipts  are  de- 
sired, the  following  form  will  serve. 

Form  160. — Dividend  Receipt. 

:  :?    : 

•    o 


$25.00  Boston,  Mass.,  October  1,  1908. 

<    . ; 
§  ^  ;  Received  of  the  Howard  Foundation  Company  Twenty-Five 

o  SS  •  Dollars,  payment  in  full  of  the  regular  quarterly  dividend  of  One 

^  §  :  and  One-half  Per  Cent,  on  the  stock  of  said  corporation  standing 

« ^  :  in  my  name. 

^     •  Henry  J.  Pollock. 

o     : 

X     ■  


348  MISCElvIvANSOUS    FORMS. 

This  receipt  is  sent  out  with  the  dividend  check  to  be 
signed  and  returned  by  the  recipient.  When  payment  of 
dividends  is  made  at  the  office  of  the  company  or  at  the 
office  of  some  specified  trust  company  or  bank,  the  parties 
receiving  payment  usually  sign  the  dividend  register  (See 
Form  195)  and  no  other  receipt  is  necessary. 

Receipts  for  instalment  payments  on  stock  are  given 
in  Forms  8  to  11. 

(c)  Corporate  Notes. 

A  corporate  note  does  not  require  to  be  sealed.  It  may 
be  signed  by  any  officer  or  officers  properly  authorized 
thereto.  Such  authority  is  usually  conferred  by  by-law 
provisions  or  by  resolution  of  the  board  of  directors,  but 
otherwise  may  be  given  by  custom.  For  large  amounts 
or  special  transactions  outside  the  usual  routine,  the  offi- 
cer's authorization  should  always  be  specific  and  usually 
by  resolution  of  the  board  of  directors. 

The  signature  of  a  corporate  note  should  always  be  the 
corporate  signature.  Any  other  signature  may  not  only 
fail  to  bind  the  corporation,  but  has  been  held  in  some 
states  to  involve  the  official  signing  the  note  in  a  personal 
liability  as  its  maker  or  endorser. 

Form  161. — Corporate  Note.     By  President. 

$500.00  New  York,  October  1,  1908. 

Ninety  days  after  date  the  Hillman  Dredging  Company  promises  to 
pay  to  the  order  of  Howard  P.  Hunt  the  sum  of  Five  Hundred  Dollars. 
Valued  Received. 

HuLMAN  Dredging  Company. 

By  Nathaniel  Potter, 
President. 
Payable  at 

Seaboard  National  Bank, 
New  York. 

Form  162. — Corporate  Note.     By  Treasurer. 

$2,500.00  Boston,  Mass.,  September  1,  1908. 

Four  months  after  date  the  Hanover  Securities   Company  promises 

to  pay  to  the  order  of  James  C.  Bennett  the  sum  of  Twenty-Five  Hun- 


CHECKS,  RECEIPTS  AND  NOTES.  349 

dred  Dollars,  with  interest  from  date  until  paid,  at  the  rate  of  Six  Per 
Cent,  per  annum,  at  the  Sedgwick  National  Bank  of  Boston. 
Value  Received. 

Hanover  Securities  Company, 
No.  725.  By  William  Curtiss, 

Due  January  1,  1909.  Treasurer. 


The  preceding  notes  are  in  the  simplest  form.  The 
corporate  signature  is  affixed  by  one  officer  or  by  two  as 
may  be  customary  or  required  by  by-law  provision  or  di- 
rected by  the  board. 

Collateral  notes  vary  greatly  in  formality  and  severity 
of  terms.  (See  §  42.)  The  following  form  is  simple  and 
is  used  by  some  of  the  larger  New  York  banks. 

Form  163. — Collateral  Note.     On  Demand. 

Coi.i<ATERAi,  Note. 


$4,000.00  New  York,  N.  Y.,  October  3,  1908. 

On  Demand  the  Hanover  Power  Company  promises  to  pay  to  the 
Seaboard  National  Bank  of  the  City  of  New  York,  or  order,  at  its  Bank- 
ing House,  No.  18  Broadway,  New  York,  N.  Y.,  Four  Thousand  Dollars 
for  value  received,  with  interest  at  the  rate  of  Six  (6%)  Per  Cent,  per 
annum  from  the  date  hereof,  said  corporation  having  deposited  with  said 
Bank  as  collateral  security  for  payment  of  this  or  any  other  liability  or 
liabilities  of  the  undersigned  to  said  Bank,  due  or  to  be  due  or  which  may 
be  hereafter  contracted  or  exist,  the  following  property  or  securities,  viz. : 
Si^ty-five  (65)  Shares  of  the  Preferred  Stock  of  the  United  States  Steel 
Corporation  of  the  par  value  of  One  Hundred  ($100)  Dollars  each,  the 
certificate  for  said  stock  standing  in  the  name  of  John  H.  Howard,  Treas- 
urer of  the  said  Hanover  Power  Company,  and  being  endorsed  by  him  in 
blank  on  the  back  of  said  certificate. 

The  market  value  thereof  is  to-day  $7,085.00,  and  full  power  and 
authority  is  hereby  given  to  said  Bank  to  sell,  assign  and  deliver  the  whole 
or  any  part  thereof,  or  any  substitutes  therefor,  or  any  additions  thereto,  at 
any  Brokers'  Board,  or  at  public  or  private  sale,  at  the  option  of  said  Bank 
or  its  assigns  on  the  non-performance  of  this  promise  or  the  non-payment 
of  any  of  the  liabilities  above  mentioned,  or  at  any  time  or  times  there- 
after, without  advertisement  or  notice,  which  are  hereby  expressly  waived ; 
and  upon  such  sale  the  holder  hereof  may  purchase  the  whole  or  any  part 
of  such  securities  discharged  from  any  right  of  redemption,  and  after  de- 
ducting all  legal  or  other  costs  and  expenses  for  collection,  sale  and  de- 
livery, shall  apply  the  residue  of  the  proceeds  of  such  sale  or  sales  so  to 
be  made  to  pay  any,  either  or  all  of  said  liabilities  to  said  Bank  or  its 
assigns,  as  said  Bank  or  its  assigns  shall  deem  proper,  returning  the 
overplus,  if  any,  to  the  undersigned.  And  the  undersigned  gives  to  said 
Bank  a  lien  to  secure  this  note  and  all  said  other  liabilities  now  existing 
or  hereafter  arising,  and  whether  at  any  time  due  or  not,  upon  all  prop- 
erty and  securities  of  the  undersigned  now  or  hereafter  deposited  with  or 


350  MISCELI.ANKOUS    FORMS. 

left  in  the  possession  of  said  Bank,  either  as  collateral  for  any  other  obK- 
gation  or  otherwise,  and  also  upon  any  balance  at  any  time  of  the  deposit 
account  of  the  undersigned  with  said  Bank.  Other  collaterals  may  be 
substituted  or  added  from  time  to  time  with  the  bank's  consent,  all  repre- 
sentations, conditions  and  agreements  as  to  original  collaterals  applying 
to  those  so  substituted  or  added. 

In   Witness    Whereof,   the    said   corporation   has   hereunto 
affixed  its  corporate  signature  and  seal,  acting  through 
its  President  and  Treasurer  duly  authorized  thereunto, 
j  CORPORATE  )  Hanover  Power  Company, 

(       SEAL       )  By  John  H.  Henderson, 

President. 
Harry  F.  Sinclair, 

Treasurer. 

Another  form  of  collateral  note  is  as  follows : 
Form  164. — Corporate  Note.     Collateral  Security. 

Collateral  Note. 


$10,000.00  New  York,  October  1,  1908. 

Ninety  days  after  date  the  Berwick  Mercantile  Company  promises 
to  pay  to  the  order  of  the  Guardian  Trust  Company  of  New  York  City, 
at  No.  170  Broadway,  New  York  City,  the  sum  of  Ten  Thousand 
Dollars,  with  interest  from  date  until  paid  at  the  rate  of  Five  (5%)  Per 
Cent,  per  annum,  and  the  said  Berwick  Mercantile  Company  doth  here- 
with deposit  with  the  Guardian  Trust  Company  as  collateral  security  for 
the  due  payment  of  the  foregoing  promissory  note.  Two  Hundred  (200) 
Shares  of  its  stock  in  one  Certificate  No.  325,  said  Certificate  standing 
in  the  name  of  Mark  Baldwin,  Treasurer  of  the  said  Berwick  Mercantile 
Company,  and  endorsed  by  him  in  blank. 

And  in  the  event  that  this  note  or  the  interest  thereon  shall  not  be 
paid  when  due,  the  said  Berwick  Mercantile  Company  hereby  appoints 
and  constitutes  the  said  Guardian  Trust  Company  its  attorney  in  fact  and 
irrevocably,  with  power  of  substitution,  to  sell  at  any  time  after  this  said 
note  or  any  interest  thereon  is  due  and  unpaid,  with  or  without  notice, 
and  either  at  public  or  private  sale,  the  whole  or  any  part  of  said  securi- 
ties, the  proceeds  thereof  to  be  applied  to  the  payment  of  the  said  prom- 
issory note,  any  interest  due  thereon,  and  any  commissions  properly  pay- 
able on  the  sales  of  said  securities  so  sold,  and  any  surplus  remaining 
thereafter,  either  of  cash  or  of  the  said  securities  to  belong  to  and  be 
subject  to  the  order  of  the  said  Berwick  Mercantile  Company;  and  should 
said  securities  not  bring  the  full  amount  of  this  present  note,  together 
with  any  interest  accrued  thereon,  said  Berwick  Mercantile  Company 
undertakes  and  agrees  to  pay  the  amount  still  due  to  the  holder  hereof 
on  demand. 

Should  any  such  sale  be  made,  the  holder  hereof  shall  directly  or  in 
the  name  of  any  other  person,  have  the  right  to  purchase  the  security 
aforesaid.  In  case  the  market  value  of  the  same  shall  decrease,  the  said 
Berwick  Mercantile  Company  hereby  promises  and  agrees  to  proportion- 
ately reduce  the  amount  of  its  indebtedness  hereunder,  or  otherwise  in- 
crease the  securitv  in  proportion  to  said  decrease  of  value. 

In  Witness  WherEoe,  the  said  Berwick  Mercantile  Company 
has   caused   its   name   to  be   subscribed  hereunto  by  its 


CHECKS,  RECEIPTS  AND  NOTES.  351 

President,  and  its  duly  attested  seal  to  be  affixed  hereto 
by  its  Secretary,  on  the  day  and  year  first  above  written, 
j  CORPORATE  )  Berwick  Mercantile  Company, 

}       SEAL        )  By  Henry  S.  Corbin, 

President. 
Attest  Seal  : 

Amos  C.  Hallock, 
Secretary. 

When  the  corporate  officials  are  not  expressly  author- 
ized to  execute  notes  by  due  resolution  deposited  with  the 
bank  in  whose  favor  the  notes  are  drawn,  a  certified  reso- 
lution evidencing  their  authority  is  usually  required.  (For 
resolution  see  Forms  84-98;  for  certification  see  Form  169.) 


CHAPTER   XXXIX. 
FORMS    FOR    CERTIFICATIONS. 


The  certifications  so  frequently  required  in  corporate 
procedure  are  never  made  in  the  corporate  name.  Cer- 
tificates and  affidavits  to  corporate  instruments  are  made 
over  their  own  names  by  the  officers  directly  interested 
or  concerned.  Acknowledgments  are  made  for  and  on  be- 
half of  the  corporation — but  not  in  its  name — by  such  cor- 
porate officials  or  agents  as  may  be  prescribed  by  statute 
or  be  authorized  thereto  by  the  by-laws  or  resolutions  of 
the  board. 

Form  165. — Certificate  to  Service  of  Notice. 

I,  the  undersigned,  Secretary  of  the  Atlantic  Machine  Works,  do 
hereby  certify  that  in  accordance  with  the  by-law  requirements  of  said 
Company,  a  copy  of  the  foregoing  notice,  properly  enclosed  and  directed, 
and  with  postage  prepaid,  was  by  me  on  the  3rd  day  of  October,  1908, 
mailed  to  each  stockholder  of  record  of  said  Company  at  his  address  as 
it  appeared  on  the  books  of  the  Company. 

Henry  H.  Linden. 
New  York  City, 

October  ISth,  1908. 

This  certificate  usually  appears  on  the  same  sheet  with 
and  below  a  copy  of  the  notice,  though  sometimes  written 
separately  and  attached  to  a  copy  of  the  notice.  (See 
§§  87,  97.)  In  this  latter  case  the  wording  of  the  cer- 
tificate must  be  changed  to  correspond  with  the  facts. 

An  affidavit,  as  in  the  case  of  the  certification,  may 
appear  on  the  same  sheet  as  the  copy  of  the  notice,  or  be 
attached  thereto. 

352 


CERTlIflCATlONS.  353 

Form  1 66. — Affidavit  to  Service  of  Notice. 


State  of  New  York,       )      . 
County  of  New  York,   f 

On  this  15th  day  of  October,  1908,  before  me  personally  appeared 
Henry  H.  Linden,  Secretary  of  the  Atlantic  Machine  Works,  who,  being 
duly  sworn,  did  depose  and  say  that  on  the  3rd  day  of  October,  1908,  a 
copy  of  the  attached  notice  of  meeting,  properly  enclosed  and  directed 
and  with  postage  prepaid,  was  by  him  mailed  to  each  stockholder  of  record 
of  said  corporation  at  his  address  as  shown  by  the  books  of  the  Company. 

Henry  H.  Linden. 
Sworn  to  and  subscribed  before  me 

the  day  and  year  aforesaid. 

John  H.  Anderson, 
j  notarial  I  Notary  Public  for  the  State 

{     SEAL.       )  and   County   of   New   York. 

The  best  evidence  of  notice  by  publication  is  furnished 
by  complete  copies  of  the  papers  in  which  the  notice  ap- 
peared. When  these  are  supplied,  no  certification  as  to 
publication  of  the  notice  is  usually  required.  If,  however, 
the  notice  is  clipped  from  the  paper  and  so  preserved,  an 
affidavit  is  sometimes  considered  desirable.  The  larger 
city  papers  furnish  such  affidavits  on  request  for  notices 
published  in  their  columns.  If  the  affidavit  is  made  by  the 
secretary  it  may  be  in  the  following  form. 

Form  167. — Affidavit  to  Publication  of  Notice. 

Affidavit. 


State  of  New  York,       ) 
County  of   New   York,  f 

On  this  15th  day  of  October,  1908,  before  me  personally  appeared 
Henry  H.  Linden,  Secretary  of  the  Atlantic  Machine  Works,  who  being 
duly  sworn,  did  depose  and  say  that  the  annexed  notice  was  published  in 
the  "New  York  Times"  on  the  3rd  and  10th  days  of  October,  1908. 

Henry  H.  Linden. 
Sworn  to  and  subscribed  before  me 

the  day  and  year  aforesaid. 
(  notarial  )  John  H.  Anderson, 

I      seal.      )  Notary  Public  for  the  State 

and  County  of  New  York. 

In  the  following  form  of  certified  resolution  the  reso- 


354  MISCEJI^LANEOUS    FORMS. 

lution  appears  on  the  upper  part  of  the  sheet  followed  by 
the  certification,  the  general  arrangement  being  the  same 
as  in  Form  172. 

Form  168. — Certified  Resolution  Designating  Bank. 

{Por  Resolution  see  Form  84.) 

I,  Sherman  H.  Rogers,  Secretary  of  the  Allis  Drug  Company,  do 
hereby  certify  that  the  foregoing  is  a  full  and  true  transcript  of  a  resolu- 
tion duly  adopted  at  a  regular  meeting  of  the  Board  of  Directors  of  the 
said  Company  held  in  the  City  of  New  York  on  the  10th  day  of  Novem- 
ber, 1908,  as  it  appears  on  the  minutes  of  said  meeting,  and  I  do  further 
certify  that  Charles  Allis  is  the  duly  elected  President  of  said  Company, 
and  Jasper  T.  Huntington  is  its  duly  elected  Treasurer. 

In  Witness  Whereof,   I   have  hereunto  affixed  my  official 
signature  and  the  corporate  seal  of  said  Company,  this 
25th  day  of  November,  1908. 
j  CORPORATE  )  Sherman  H.  Rogers, 

I        SEAL.      )  Secretary. 

The  following  certification  is  employed  in  connection 
with  the  resolution  given  in  Form  84a: 

Form    1 68a. — Certification     of     Resolution     Designating 
Bank. 

I,  John  H.  Farwell,  Assistant  Secretary  of  the  Standard  Milling 
Company,  do  hereby  certify  that  the  foregoing  resolution  was  duly  adopted 
at  a  regular  meeting  of  the  Board  of  Directors  of  said  Company  held  on 
Tuesday,  November  10,  1908,  in  the  office  of  the  Company,  225  Fifth 
Avenue,  New  York,  all  as  shown  by  the  minutes  of  said  meeting,  and  that 
the  transcript  of  Section  3,  Article  VIT  of  the  By-laws  of  said  Company 
appearing  in  the  preamble  of  said  resolution  is  a  true  and  accurate  trans- 
cript thereof  from  the  duly  adopted  By-laws  of  the  Company,  and  I  do 
further  certify  that  Henry  F.  Farrand  is  the  duly  elected  Treasurer  of 
said  Company  and  Howard  C.  Malcolm  is  its  duly  elected  President. 

Witness  my  official  signature  and  the  corporate  seal  of  said 
Company,  this  18th  day  of  November.  1908. 

John  H.  Farwell, 
/corporate  \  Assistant  Secretary. 

I         SEAL.        J 

If  the  bank  requires  certified  signatures  of  the  signing 
officials,  these  signatures  might  be  written  on  the  same 
sheet  between  the  resolution  and  certification,  and  the  fol- 
lowing phrase  be  added  to  the  certification:  "and  that  the 


CERTIFICATIONS.  355 

signatures  above  written  are  respectively  the  signatures 
of  the  said  Henry  F.  Farrand  and  Howard  C.  Malcolm." 

A  different  form  of  certification  employed  in  connec- 
tion with  the  resolution  of  Form  85  is  as  follows: 

Form  169. — Certification  of  Resolution. 

The  undersigned,  Secretary  of  the  American  Textile  Company,  does 
hereby  certify  that  the  foregoing  resolution  was  duly  adopted  on  the  10th 
day  of  December,  1908,  at  a  meeting  of  the  Board  of  Directors  of  said 
Company  regularly  called  and  duly  constituted  and  at  which  a  quorum  was 
present. 

Witness  my  hand  and  the  seal  of  said  corporation  this  12th 
day  of  December,  1908. 

Alfred  Dilworth, 
(■corporate  \  Secretary. 

I         SEAL.       / 


Form  170. — Certificate  of  Election  of  Treasurer. 

I,  Horace  B.  Elkins,  Secretary  of  the  Ellwood  Creamery  Company, 
hereby  certify  that  at  a  regular  and  duly  constituted  meeting  of  the  Board 
of  Directors  of  said  Company  held  in  the  City  of  Albany  on  the  1st  day 
of  December,  1908,  Henry  Howells  was  elected  Treasurer  of  said  Com- 
pany to  fill  the  vacancy  in  said  office  caused  by  the  death  of  J.  J.  Mc- 
Allen,  and  that  the  said  Henry  Howells  is  now  the  duly  qualified  and 
authorized  Treasurer  of  the  said  Ellwood  Creamery  Company. 

Witness  my  hand  and  the  seal  of  the  Company  this  10th  day 
of  December,  1908. 

Horace  B.  Elkins, 
(corporate  1  Secretary. 

\       seal.     J 

The  following  certificate  of  the  election  of  corporate 
officials  may  be  used  when  greater  formality  is  desired. 

Form  171. — Certificate  of  Election  of  Officers. 

I,  Emory  Hardin,  Secretary  of  the  Dyett-King  Leather  Company,  do 
hereby  certify  that  the  directors  of  said  Company  being  duly  assembled 
in  lawful  meeting  in  the  office  of  the  Company,  No.  75  Dey  St.,  New 
York  City,  on  the  9th  day  of  November,  1908,  and  a  quorum  being  pres- 
ent, did  then  and  there  elect  Frederick  Myers  President  and  Walter  C. 
Jackson  Treasurer  of  said  corporation,  to  serve  for  the  ensuing  year  and 
until  the  due  election  and  qualification  of  their  successors,  and  that  Fred- 
erick Myers  and  Walter  C.  Jackson  are  now  duly  and  fully  qualified  and 
empowered  to  act  for  said  corporation  in  their  respective  official  capacities. 


356  MISCKLLANEJOUS    FORMS. 

In  Testimony  Whereof,  I  have  hereunto  affixed  my  official 
signature  and  the  corporate  seal  of  said  Company  this 
15th  day  of  November,  1908. 

Emory  Hardin, 
f  CORPORATE  \  Secretary. 

I         SEAL.        J 

The  following  are  convenient  forms  for  certifications 
of  transcripts. 

Form  172. — Certification.      Transcript  from  By-laws. 

CONSOLIDATED    CRACKER    COMPANY. 


Transcript  from   By-Laws. 


"ArticivE   IV.— Officers. 

"Sec.  2.     The  President. 

"The  President  when  present  shall  preside  at  all  meetings  of  the 
stockholders  and  of  the  Board  of  Directors ;  shall  sign  all  certificates  of 
stock ;  shall  sign  or  countersign  as  may  be  necessary  all  such  bills,  notes, 
checks,  drafts  and  other  instruments  as  may  pertain  to  the  ordinary  course 
of  the  Company's  business,  and  shall  sign  when  duly  authoried  thereto  all 
contracts,  orders,  deeds,  licenses  and  other  instruments  of  a  special  nature. 

"He  may  also  in  the  absence  or  disability  of  the  Treasurer,  endorse 
checks,  drafts  and  other  negotiable  instruments  for  deposit  or  collection, 
and  shall  with  the  Secretary  sign  the  minutes  of  all  meetings  over  which 
he  presides." 


I,  James  T.  Howard,  Secretary  of  the  Consolidated  Cracker  Com- 
pany, do  hereby  certify  that  the  above  is  a  true  and  correct  copy  of  Sec- 
tion 2,  Article  IV  of  the  duly  adopted  by-laws  of  this  Company,  and  in 
testimony  thereof  I  have  hereunto  affixed  my  official  signature  and  the 
seal  of  the  Company  in  the  City  of  Brooklyn,  on  this  21st  day  of  Novem- 
ber, 1908. 

James  T.  Howard, 
f  CORPORATE  "I  Secretary. 

\       seal.      / 


Form  1 73. — Certification.     Transcript  from  Minutes. 

Transcript  from   Minutes. 
WESTON  MANUFACTURING  CORPORATION. 


Regular  Meeting  of  Directors  Held  September  15,  1908. 


(Transcript  from  minutes  appears  here.) 


I,  the  undersigned,  Secretary  of  the  Weston  Manufacturing  Corpora- 
tion, do  hereby  certify  that  the  above  and  foregoing  is  a  true  and  accurate 
transcript  from  the  minutes  of  a  regular  meeting  of  the  Board  of  Direc- 


CERTlIflCATlONS.  357 

tors  of  said  Company  held  in  the  office  of  the  Company  on  the  ISth  day 
of  September,  1908,  and  recorded  on  pages  85  to  87  of  the  Minute  Book 
of  said  Company. 

Witness  my  hand  and  the  seal  of  the  Company  this  14th  day 
of  November,  1908. 

Horace  Potter, 
f  CORPORATE  \  Secretary. 

I        SEAL.       J 

The  president  occasionally  joins  with  the  secretary  in 
the  certification  of  any  special  important  transcript.  In 
such  case  the  certificate  is  changed  as  follows: 

Form    174. — Certification    of    Minutes.        President    and 
Secretary. 

We,  the  undersigned,  President  and  Secretary  respectively  of  the 
Weston  Manufacturing  Corporation,  do  hereby  certify  that  the  above  and 
foregoing  is  a  true  and  accurate  transcript  from  the  minutes  of  a  regular 
meeting  of  the  Board  of  Directors  of  said  Company  held  in  the  office  of 
the  Company  on  the  ISth  day  of  September,  1908,  and  recorded  on  pages 
85  to  87  of  the  Minute  Book  of  said  Company. 

In  Witness  Whereof,  we  have  hereunto  affixed  our  official 
signatures  and  the  seal  of  the  Company  in  the  City  of 
New  York  on  this  14th  day  of  November,  1908. 
/corporate  )  Henry    J.    Randall, 

I       SEAL.      J  President. 

Horace  Potter, 

Secretary. 

Affidavits  take  the  place  of  the  secretary's  certificate 
when  corporate  records  or  transcripts  therefrom  are  re- 
quired for  use  in  legal  proceedings. 

Form  175. — Secretary's  Affidavit  to  Minutes. 

County  of  New  York,    ) 
State  of  New  York,        p"^" 

On  this  14th  day  of  November,  1908,  before  me  personally  appeared 
Horace  Potter,  who  being  duly  sworn,  did  depose  and  say  that  he  is  the 
Secretary  of  the  Weston  Manufacturing  Corporation ;  that  he  was  present 
at  the  regular  meeting  of  the  Directors  of  that  Company  held  on  the  15th 
day  of  September,  1908;  that  he  recorded  the  proceedings  of  said  meeting 
in  the  Minute  Book  of  the  corporation,  and  that  the  above  and  forego- 
ing is  a  true  and  correct  transcript  from  the  minutes  so  recorded. 

Horace  Potter. 
Sworn  to  and  subscribed  before  me 
on  the  day  and  year  above  stated. 

(Notarial  signature  and  seal.) 


358  misce;i.IvAne:ous  forms. 

Notarial  exemplifications  of  certified  transcripts  from 
the  corporate  records  are  sometimes  required  as  illustrated 
by  the  following  form. 

Form  176. — Notarial  Exemplification  of  Minutes. 

State  of  New  York,  ) 
County  of  New  York,  [  ^^■• 

Personally  appeared  before  me  this  20th  day  of  November,  1908, 
Horace  Potter,  to  me  well  known,  and  acknowledged  that  he  signed  the 
foregoing  certification  of  a  transcript  from  the  minutes  of  the  Weston 
Manufacturing  Corporation,  and  afifixed  the  seal  of  said  Company  thereto 
as  Secretary  of  the  said  Company  for  the  purposes  therein  set  forth,  and 
I  have  personally  examined  the  minutes  of  said  Company  under  date  of 
September  15th,  1908,  and  certify  that  the  foregoing  transcript  is  correctly 
transcribed  therefrom. 

Morris   Manning^ 
j  NOTARIAI,  )  '  Notary  Public  for  the  State 

]      SEAL.      )  and  County  of  New  York. 

No.  765. 
Term  expires  December  1,  1908. 

The  treasurer's  certifications  to  matters  relating  to  the 
corporate  finances  are  usually  in  the  form  of  affidavits. 

Form  177. — Treasurer's  Affidavit.     Corporate  Statement. 

State  of  New  York,   [ 
County  of  New  York,  i'"^"^-' 

On  this  19th  day  of  October,  1908,  personally  appeared  before  me,  a 
Notary  Public  in  and  for  the  County  of  New  York,  Walter  L.  Hood, 
Treasurer  of  the  Hood  Scale  Company,  who,  being  duly  sworn,  did  depose 
and  say  that  he  has  full  charge  and  control  of  the  books  and  accounts  of 
the  said  Company;  that  the  above  and  foregoing  statement  is  taken  from 
said  books  and  accounts ;  that  it  is  a  true  and  accurate  transcript  there- 
from, and  that  to  the  best  of  his  knowledge  and  belief  it  is  a  just  and 
correct  presentation  of  the  financial  condition  of  said  Company  on  this 
date. 

Waeter  L.  Hood. 
Sworn  to  before  me  the 

day  and  year  aforesaid. 

James  H.  Steele, 

(  NOTARIAI,  )  Notary  Public  for 

(      SEAE.      )  New  York  County. 

No.  994. 
Term  expires  Feb.  15,  1909. 

This  affidavit  follows  the  statement  on  the  same  sheet, 
or  on  the  last  sheet  if  the  statement  extends  over  several 
pages.  In  the  affidavit  which  follows  the  statement  of  ac- 
count is  included  with  the  form. 


CERTIFICATIONS.  359 

Form  177a. — Treasurer's  Affidavit.     Individual  Statement. 


New  York,  December  1,  1908. 
Howard  J.  EtKiNs,  Dr. 

To  Fielding  Desk  Company. 
1908 
Nov.  14    To  1  Standard  Roll  Top  Mahogany  Desk,  54"... $75.00 

1  Bookkeeper's  Desk,  48" 35.00    $110.00 


State  of  New  York,   ) 
County  of  New  York,  \^^-' 

On  this  1st  day  of  December,  1908,  appeared  before  me,  a  Notary 
Public  in  and  for  the  County  of  New  York,  John  J.  Fielding,  Treasurer 
of  the  Fielding  Desk  Company,  who,  being  duly  sworn,  did  depose  and 
say  that  he  has  full  charge  and  control  of  the  books  of  account  of  said 
Company;  that  the  above  statement  of  indebtedness  of  Howard  J.  Elkins 
to  said  Fielding  Desk  Company  is  taken  from  said  books  of  account,  and 
that  it  is  a  true  and  accurate  statement  of  said  indebtedness  of  said 
Howard  J.  Elkins  on  this  date. 

John  J.  Fielding. 
Subscribed  and  sworn  to  before  me 

the  day  and  year  aforesaid. 

(Notarial  signature  and  seal.) 

When  corporate  acknowledgments  are  taken  the  notary 
should  not  be  an  officer  or  stockholder  of  the  corporation. 
The  form  of  acknowledgment  is  usually  regulated  by  stat- 
ute and  therefore  varies  in  almost  every  state  of  the  Union. 
The  following  form  of  corporate  acknowledgment  is  that 
prescribed  by  the  statutes  of  New  York. 


Form  178. — Notarial  Acknowledgment.    New  York. 

State  of  New  York,       ) 
County  of  New  York,     J  "• 

On  this  16th  day  of  November  in  the  year  1908,  before  me  personally 
came  John  J.  Kerry,  to  me  known,  who,  being  by  me  duly  sworn,  did 
depose  and  say  that  he  resided  in  the  City  of  New  York;  that  he  is  the 
President  of  the  Kerry  Machine  Works,  the  corporation  described  in  and 
which  executed  the  above  instrument ;  that  he  knew  the  seal  of  said 
corporation ;  that  the  seal  affixed  to  said  instrument  was  such  corporate 
seal ;  that  it  was  so  affixed  by  order  of  the  Board  of  Directors  of  said 
corporation,  and  that  he  signed  his  name  thereto  by  like  order. 

John  J.  Kerry. 
Sworn  to  before  me  the 

day  and  year  aforesaid. 

(Notarial  signature  and  seal.) 


CHAPTER  XL. 

POWERS  OF  ATTORNEY,  CONTRACTS  AND 
ASSIGNMENTS. 


(a)   Powers  of  Attorney. 

The  execution  of  a  power  of  attorney  varies  according 
to  the  powers  conveyed  and  the  conditions  under  which 
it  is  given.  The  instrument  which  follows  does  not  re- 
quire acknowledgment  when  the  parties  are  known  to  the 
corporate  officials.  If  otherwise  acknowledgment  is  usu- 
ally required.     (See  Forms  130a,  130b.) 

Form  179. — Power  of  Attorney.     To  Receive  Dividends. 

Power  of  Attorney. 


I,  the  undersigned,  do  hereby  constitute  and  appoint  George  H.  Wil- 
liams of  New  York  City,  my  true  and  lawful  attorney,  for  me  and  in  my 
place  and  stead,  to  receive  any  and  all  dividends  that  may  be  declared 
upon  Fifty  Shares  of  Preferred  Stock  of  the  Howard  Bank  Note  Com- 
pany now  standing  in  my  name  on  the  books  of  said  Company,  and  to 
receipt  for  the  same,  and  to  do  all  other  things  that  may  be  necessary  to 
carry  into  effect  the  intent  of  this  power  of  attorney;  and  I  hereby  ratify 
and  confirm  all  that  my  said  attorney  may  properly  do  by  virtue  of  the 
authority  herein  conferred. 

In   Witness   WherEoe,   I   have   hereunto   affixed   my   signa- 
ture and  seal  this  7th  day  of  December,  1908. 

George  H.  Lane.  [t.s.] 

Witnessed  by 

Howard  Lansing. 

A  corporate  power  of  attorney  differs  from  the  or- 
dinary form  only  in  those  details  directly  incident  to  its 
corporate  origin. 

360 


POWERS  OF  ATTORNEY  AND  CONTRACTS.  361 

Form  1 80. — Power  of  Attorney.     To  Collect  Money. 

Power  of  Attorney, 


Know  Aii,  Men  by  These  Presents  : 

That  the  Tucson  Cattle  Company,  a  corporation  duly  organized  under 
the  laws  of  Arizona,  does  hereby  make,  constitute  and  appoint  Howard 
H.  McComb  of  the  State  of  New  York,  its  true  and  lawful  attorney,  for 
it  and  in  its  name,  place  and  stead,  to  collect  and  receive  from  the  New 
York  Drovers'  Association  of  New  York  City  the  sum  of  Three  Thousand 
($3,000)  Dollars  with  interest  thereon  at  the  legal  rate  from  the  1st  day 
of  January,  1908,  said  amount  being  due  and  payable  to  the  Tuscon  Cattle 
Company  for  and  on  account  of  cattle  shipped  the  said  New  York  Drovers' 
Association  during  the  month  of  December,  1907,  and  the  said  Howard 
H.  McComb  is  hereby  fully  authorized  and  empowered  for  and  on  account 
of  the  said  Tuscon  Cattle  Company  and  in  its  name,  to  collect,  receive 
and  receipt  for  the  said  Three  Thousand  ($3,000)  Dollars,  and  the  in- 
terest thereon  as  aforesaid,  in  whole  or  in  part,  but  without  prejudice 
to  any  portion  thereof  unpaid,  and  to  incur  and  pay  on  behalf  of  the  said 
Tucson  Cattle  Company  all  reasonable  expenses  incident  to  the  collection 
of  said  amount,  including  all  proper  cost  of  any  suit  or  other  legal  pro- 
ceedings necessary  thereto,  and  generally  to  do  all  such  other  things  in 
connection  therewith  as  may  be  necessary  and  proper  in  the  premises. 

In  Witness  Whereof,  the  said  Tucson  Cattle  Company  has 
caused  its  corporate  name  to  be  signed  hereunto  by  its 
President  and  its  corporate  seal  to  be  affixed  and  attested 
by  its  Secretary,  all  being  done  in  the  City  of  Tucson, 
Arizona,  on  this  the  25th  day  of  November,  1908. 
(  CORPORATE  )  Tucson  Cattle  Company, 

I      SEAL       )  By  George  M.  Price, 

President. 
ATTEST  seal: 

Wilson  M.  BurnEy, 
Secretary. 

The  foregoing  power  of  attorney  would  usually  be  ac- 
knowledged in  order  to  give  it  greater  weight  and  more 
ready  recognition.  For  the  same  reasons  the  power  of  at- 
torney which  follows  should  either  be  accompanied  by  a 
certified  copy  of  the  resolution  by  which  it  was  authorized, 
or  otherwise  be  acknowledged. 

Form  181. — Power  of  Attorney.     To  Make  Delivery  of 
Deed. 

Power  of  Attorney. 


Know  All  Men  by  These  Presents  : 

That  the  Albany  Flouring  Mills,  a  corporation  duly  organized  under 
the  laws  of  the  State  of  New  York,  and  having  its  principal  office  and 
place  of  business  in  Albany,  New  York,  has  made,  constituted  and  ap- 


362  MISCEJIvlrANEOUS  FORMS. 

pointed,  and  by  these  presents  does  make,  constitute  and  appoint,  George 
H.  McCall  of  Philadelphia,  Pennsylvania,  its  true  and  lawful  attorney,  for 
it  and  its  name  and  stead,  to  deliver  to  the  Adams  Foundation  Company 
of  Philadelphia,  Pennsylvania,  a  certain  deed  duly  executed  by  the  said 
Albany  Flouring  Mills  and  transferring  to  the  said  Adams  Foundation 
Company  the  property  therein  described  at  Nos.  1534,  1536  and  1538  West 
Side  Avenue,  Philadelphia,  and  to  receive  payment  for  the  property 
transferred  by  said  deed,  and  the  said  George  H.  McCall  is  hereby  fully 
authorized  and  empowered  for  and  on  behalf  of  this  Company  to  make 
good  and  valid  delivery  of  the  said  deed  and  to  receive  from  the  said 
Adams  Foundation  Company  the  sum  of  Nineteen  Thousand,  Two  Hun- 
dred and  Fifty  ($19,250)  Dollars  in  cash,  payment  for  the  property  trans- 
ferred by  said  deed,  and  to  receipt  for  said  payment,  and  to  do  all  such 
other  things  as  may  be  necessary  and  proper  in  the  premises. 

In  Witness  Whereof,  the  said  Albany  Flouring  Mills  has 
caused  its  corporate  seal  to  be  affixed  hereunto  by  its 
Secretary  and  its  name  to  be  subscribed  hereto  by  its 
President,  all  being  done  in  the  City  of  Albany,  and  State 
of  New  York,  on  this  first  day  of  December,  1908. 
j  CORPORATE  )  Albany  Flouring  Miles, 

(      SEAL       )  By  Jesse  H.  Blanchard, 

President. 

ATTEST  seal: 

Julian  Hurndon, 

Secretary. 

The  power  of  attorney  which  follows  authorizes  the 
sale  of  land  and  the  execution  and  delivery  of  the  deeds, 
and  therefore  requires  the  same  formal  execution  as  a 
deed.  Without  this  it  is  ineffective.  The  form  of  execu- 
tion must  comply  with  the  law  of  the  state  in  which  the 
land  to  be  conveyed  is  located. 

Form   182. — Power  of  Attorney.     To  Manage,  Sell  and 
Deed  Land. 

Power  oe  Attorney. 


Know  All  Men  by  These  Presents  : 

That  the  Berwell  Investment  Company,  a  corporation  duly  organized 
and  existing  under  and  by  virtue  of  the  laws  of  the  State  of  New  York, 
and  having  its  office  and  principal  place  of  business  at  No.  30  Broad  Street, 
in  the  City  of  New  York,  has  made,  constituted  and  appointed,  and  by 
these  presents  does  make,  constitute  and  appoint,  Horace  M.  Maxwell  of 
Houston,  Texas,  its  true  and  lawful  attorney,  for  it  and  in  its  name, 
place  and  stead,  to  bond,  grant,  bargain,  sell,  contract,  lease,  exchange,  give 
options  on,  sell  timber  from,  sell  or  lease  oil,  coal  or  other  mineral  rights 
in  or  on,  or  handle  or  dispose  of  in  such  other  way  as  may  by  him  be 
deemed  advantageous  and  advisable,  and  for  such  consideration  and  on 
such  terms  as  he  mav  approve,  and  in  whole  or  in  part,  that  certain  tract 
or  parcel  of  land,  owned  by  said  Berwell  Investment  Company,  in  Brazos 
County,  'i'exas,  consisting  of  the  east  half  of  the  league  of  land  known 


POWERS  OP  ATTORNEY  AND  CONTRACTS.  363 

as  the  J.  J,  Oliver  League,  and  containing  Two  Thousand,  Two  Hundred 
and  Fourteen  (2,214)  Acres,  more  or  less,  said  land  being  part  of  the 
Headright  granted  to  J.  J.  Oliver  by  the  Mexican  Government  and  sur- 
veyed by  the  County  Surveyor  in  1838,  and  conveyed  to  the  Berwell  In- 
vestment Company  by  deed  from  the  said  J.  J.  Oliver,  dated  July  1st,  1856, 
and  recorded  in  the  office  of  the  County  Clerk  of  Brazos  County,  D.  B. 
15,  page  225;  and  the  said  Berwell  Investment  Company  grants  to  its 
said  attorney  full  power  and  authority  to  collect  and  receive  for  said 
Company  all  rents,  royalties  and  other  considerations  or  payments  de- 
rived from  the  said  property  in  any  way;  and  for  the  said  Berwell  In- 
vestment Company  and  in  its  name  and  stead,  either  alone  or  jointly  with 
others,  as  may  be  requisite  and  necessary,  to  make,  execute,  acknowledge 
and  deliver  good  and  sufficient  deeds,  conveyances,  option  contracts  or 
leases  for  the  said  property,  or  for  any  parts  thereof,  or  for  any  rights 
therein  or  thereon,  giving  and  granting  its  said  attorney  full  power  and 
authority  to  do  and  perform  any  and  every  act  and  thing  whatsoever 
requisite  and  necessary  to  be  done  in  the  premises,  the  said  Company 
hereby  ratifying  and  confirming  all  that  its  said  attorney  shall  lawfully 
do  or  cause  to  be  done  by  virtue  of  this  present  indenture. 

In  Witness  Whereof,  the  said  Berwell  Investment  Company 
has  caused  its  corporate  name  to  be  signed  by  its  Presi- 
dent and  its  corporate  seal  to  be  affixed  by  its  Secretary, 
all  being  done  in  the  City  of  New  York  on  this  the  18th 
j  CORPORATE  /      day  of  August,  1908. 
(      SEAL       )  Berwell  Investment  Company, 

By  James  Warren, 
President. 
attest  seal: 

Willis  Baker, 

Secretary. 

This  instrument  is  sweeping,  giving  the  agent  prac- 
tically every  power  over  the  lands  affected  that  the  com- 
pany has  itself.  The  acknowledgment  must  in  this  case 
follow  the  Texas  form. 

When  a  corporate  power  of  attorney  is  given  for  some 
special  act,  it  expires  automatically  as  soon  as  that  act  is 
performed.  When,  however,  it  is  desired  to  terminate  the 
powers  prior  thereto,  or  where  the  power  is  a  continuing 
one,  a  formal  revocation  is  necessary.  Notice  of  this  re- 
vocation should  be  sent  to  the  parties  directly  interested, 
and,  in  case  of  a  general  power  of  attorney,  should  also  be 
published. 

Form  183. — Revocation  of  Power  of  Attorney. 

Know  All  Men  by  These  Presents: 

That  the  Berwell  Investment  Company,  a  corporation  duly  organized 
and  existing  under  and  by  virtue  of  the  laws  of  the  State  of  New  York, 


364  MISCElvI/ANEOUS   FORMS. 

and  haying  its  office  and  principal  place  of  business  at  No.  30  Broad 
Street  in  the  City  of  New  York,  has  for  good  cause  and  consideration 
revoked,  recalled,  annulled  and  made  void,  and  by  these  presents  does 
revoke,  recall,  annul  and  make  void  a  certain  power  of  attorney  given 
under  date  of  August  18th,  1908,  under  the  corporate  signature  and  seal, 
to  Horace  M.  Maxwell  of  Houston,  Texas,  and  does  hereby  withdraw, 
deny  and  cancel  any  and  all  powers  and  authorities  whatsoever  therein 
expressed  and  conveyed. 

In  Witness  WherEoe',  the  said  Berwell  Investment  Company 
has  caused  its  corporate  signature  and  seal  to  be  here- 
unto affixed  by  its  President  and   Secretary  in  the  City 
of  New  York  on  this  19th  day  of  November,  1908. 
(  CORPORATE  )  Berwell  Investment  Company, 

(      SEAL.        )  By  James  Warren, 

President. 
Willis  Baker, 

Secretary. 


(b)  Corporate  Contracts. 

Corporate  contracts  differ  in  nowise  from  contracts 
between  individuals,  save  in  the  verbiage  necessary  to 
adapt  them  to  the  corporate  form.  The  forms  which  fol- 
low are  included  merely  to  illustrate  this  adaptation. 

Form  184. — Corporate  Contract. 

Contract. 


An  Agreement,  made  and  entered  into  this  2Sth  day  of  November, 
A.  D.  1908,  by  and  between  the  Atlas  Lithographing  Company,  a  corpora- 
tion duly  organized  under  the  laws  of  the  State  of  Maine  and  having  its 
usual  place  of  business  in  Boston,  Massachusetts,  party  of  the  first  part, 
and  the  Selby  Lithographing  Company,  a  corporation  organized  under  the 
laws  of  the  State  of  New  York,  and  having  its  principal  office  and  place 
of  business  at  No.  20  Broad  Street  in  the  City  of  New  York,  party  of  the 
second  part. 

For  and  in  consideration  of  the  sum  of  One  Dollar  and  of  other 
valuable  considerations  passing  between  the  parties  hereto,  the  receipt 
whereof  is  hereby  respectively  acknowledged,  it  is  agreed  as  follows : 

(1)  That  the  said  party  of  the  first  part  shall  employ  one  John  H. 
Bernard  of  Boston,  Massachusetts,  for  account  of  both  the  parties  here- 
unto, to  work  upon  and  perfect  as  far  as  may  be,  a  certain  improvement 
in  lithography  known  as  the  "Silver  Plate  Process,"  said  process  being 
now  the  joint  property  of  the  said  parties  to  this  present  agreement. 

(2)  That  said  narty  of  the  first  part  shall  pay  the  said  John  H. 
Bernard  a  monthly  salary  not  exceeding  Three  Hundred  ($300)  Dollars 
and  shall  also  furnish  such  materials,  supplies  and  assistance^  as  the  said 
John  H.  Bernard  may  reasonably  require  in  the  progress  of  his  work. 

(3)  That  at  the  end  of  each  quarter  said  party  of  the  first  part  shall 
render  a  statement  of  the  expenses  incurred  by  reason  of  the  employment 
of  the  said  John  H.  Bernard  for  the  perfection  of  the  said  Silver  Plate 


POWERS  OF  ATTORNEY  AND  CONTRACTS.  365 

Process,  and  said  party  of  the  second  part  shall  within  ten  days  of  the 
receipt  of  said  statement  remit  one-half  thereof  to  the  said  party  of  the 
first  part. 

(4)  That  all  improvements  in  said  Silver  Plate  Process  or  in  con- 
nection therewith  that  may  be  made  or  discovered  by  the  said  John  H. 
Bernard,  shall  be  the  joint  and  equal  property  of  the  two  parties  to  this 
present  agreement,  and  patents  therefor  shall  be  taken  out  in  the  names 
of  the  said  parties  of  this  present  agreement  and  at  their  joint  expense. 

(5)  That  said  employment  of  said  John  H.  Bernard  shall  continue 
for  one  year  from  date,  unless  sooner  terminated  by  mutual  agreement  or 
by  circumstances  beyond  the  control  of  the  parties  hereto. 

(Testimonium  and  signatures  as  in  Form  146). 

This  agreement  might  or  might  not  be  acknowledged 
at  the  discretion  of  the  parties.  The  contract  as  executed 
is  legally  sufficient.  The  only  advantage  to  be  gained  by 
an  acknowledgment  is  the  greater  ease  of  proving  the  au- 
thenticity and  due  execution  of  the  instrument  in  case  of 
litigation. 

Form  185. — Corporate  Bill  of  Sale. 

Bill  of  Sale. 


Know  All  Men  by  These  Presents  : 

That  the  Standard  Laundry  Machine  Company,  a  corporation  duly 
organized  under  the  laws  of  the  State  of  New  York,  with  its  principal 
office  and  place  of  business  at  No.  50  Dey  St.,  in  the  City  of  New  York, 
in  consideration  of  the  sum  of  One  Thousand  Dollars  to  it  paid  by  the 
Clipper  Laundry  Company  of  No.  71  East  21st  St.,  New  York  City,  the 
receipt  whereof  is  hereby  acknowledged,  does  hereby  sell,  transfer  and 
assign  to  the  said  Clipper  Laundry  Company  the  following  goods  and 
chattels,  viz. : 

All  of  the  laundry  machinery,  tools,  and  apparatus  of  every  kind  now 
in  the  premises  at  No.  365  West  19th  St.,  formerly  occupied  by  the  Union 
Laundry  Company,  all  as  set  forth  and  specified  in  the  annexed  schedule; 
to  have  and  to  hold  all  and  singular  the  said  goods  and  chattels  to  the  said 
Clipper  Laundry  Company,  its  successors  and  assigns  to  their  own  use 
and  behoof  forever,  and  the  said  Standard  Laundry  Machine  Company  does 
hereby  covenant  with  the  said  grantee  that  the  said  Standard  Laundry 
Machine  Company  is  the  lawful  owner  of  said  goods  and  chattels ;  that 
they  are  free  from  all  liens ;  that  it  has  good  right  to  sell  the  same  as 
aforesaid;  and  that  it  will  warrant  and  defend  the  same  against  the  law- 
ful claims  and  demands  of  all  persons. 

In  Witness  Whereof,  the  said  Standard  Laundry  Machine 
Company  has  caused  its  corporate  name  to  be  signed 
hereunto  by  its  President,  and  its  corporate  seal  to  be 
affixed  and  duly  attested  by  its  Secretary,  said  corporate 
seal  being  affixed  both  to  these  presents  and  to  the 
schedule  hereunto  annexed,  all  being  done  in  the  City 
of  New  York,  on  this  10th  day  of  October,  1908. 
(Signature  and  attested  seal  as  in  Form  188.) 


366  MISCElvIvANEOUS  FORMS. 

The  inventory  or  schedule  of  the  goods  conveyed  by 
this  bill  of  sale  should  be  attached  to  it,  and,  in  accordance 
with  the  provisions  of  the  conveyance,  be  identified  by  the 
duly  attested  seal  of  the  company. 

(c)  Assignments. 

Form  1 86. — Assignment  of  Contract. 

Assignment. 


Know  All  Men  by  These  Presents: 

That  for  and  in  consideration  of  the  payment  by  the  Connecticut 
Valley  Paper  Mills,  a  corporation  organized  under  the  laws  of  the  State 
of  Connecticut  and  having  its  principal  office  and  place  of  business  at  525 
Main  Street,  New  Haven,  Connecticut,  of  Twenty-five  Thousand,  Seven 
Hundred  and  Forty-five  ($25,745)  Dollars  to  the  Holden  Chemical  Com- 
pany, a  corporation  duly  organized  under  the  laws  of  the  State  of  New 
York  and  having  its  principal  office  and  place  of  business  at  152  Warren 
Street,  New  York  City,  the  receipt  of  which  payment  is  by  the  last-named 
corporation  hereby  acknowledged,  said  Holden  Chemical  Company  does 
hereby  assign,  transfer  and  convey  to  the  said  Connecticut  Valley  Paper 
Mills,  all  and  singular,  its  right,  title  and  interest  of  every  kind  in  and  ta 
a  certain  contract  (copy  of  which  is  hereunto  annexed  and  made  part  of 
this  present  instrument)  entered  into  on  the  31st  day  of  July,  1908,  be- 
tween Martin  S.  Coleman  of  Brooklyn,  New  York,  and  the  said  Holden 
Chemical  Company,  said  contract  vesting  in  the  said  last-named  company, 
its  successors  and  assigns,  under  the  conditions  set  forth  in  said  contract, 
the  exclusive  right  to  acquire  and  use  all  the  inventions  and  processes  that 
may  hereafter  be  made,  discovered  or  devised  by  the  said  Coleman  for  the 
manufacture  of  paper  or  to  be  used  in  connection  therewith,  said  contract 
being  conveyed  to  and  accepted  by  the  said  Connecticut  Valley  Paper  Mills 
with  all  its  rights,  privileges  and  obligations  as  herein  set  forth  and  as 
hereunto  held  by  the  said  Holden  Chemical  Company. 

In  Witness  Whereof,  the  said  Holden  Chemical  Company 
has  hereunto  caused  its  corporate  name  and  seal  to  be 
affixed  by  its  President  and  Secretary,  all  being  done  in 
the  City,  County  and  State  of  New  York,  on  this  28th 
day  of  October,  1908. 
j  CORPORATE   I  Holden  Chemical  Company, 

(     SEAL.        )  By  James  Holden, 

President. 

Harold  Sheldon, 

Secretary. 


Acknowledgment  is  not  essential  to  this  assignment  but 
is  advisable.  The  instrument  as  given  does  not  relieve  the 
assigning  company  from  liability  under  the  assigned  con- 
tract.    To  secure  this,  a  specific  release  from  the  other 


POWERS  OF  ATTORNEY  AND  CONTRACTS.  367 

party  to  the  assigned  contract  is  essential.  A  simple  form 
of  such  release  to  follow  the  foregoing  contract  or  to  be 
attached  to  it  is  as  follows : 

Form  187. — Assent  to  Assignment  of  Contract. 

I,  Martin  S.  Coleman  of  Brooklyn,  New  York,  party  of  the  first  part 
to  a  certain  contract  entered  into  on  the  31st  day  of  July,  1908,  with  the 
Holden  Chemical  Company  of  New  York  City,  do  for  good  and  valuable 
considerations,  the  receipt  of  which  is  hereby  acknowledged,  consent  and 
agree  to  the  transfer  of  said  contract  to  the  Connecticut  Valley  Paper 
Mills  as  set  forth  in  the  foregoing  assignment,  and  to  the  substitution  of 
the  said  Connecticut  Valley  Paper  Mills  for  the  Holden  Chemical  Com- 
pany in  said  contract,  and  do  hereby  release,  relieve  and  discharge  the 
said  Holden  Chemical  Company  from  any  claim,  liability  or  other  obliga- 
tion for,  on  account  of  or  by  reason  of  said  contract. 

Witness  my  hand  and  seal  this  28th  day  of  October,  1908. 

Martin  S.  ColEman.        [L.  S.] 

The  assignment  of  contract  which  follows  is  informal 
but  sufficient  where  the  whole  transaction  is  well  under- 
stood. In  practice  it  is  usually  endorsed  on  the  back  of 
the  contract  to  be  assigned  or,  with  the  word  "within" 
changed  to  "above  and  foregoing,"  is  placed  on  the  last 
page  of  the  contract. 

Form  188. — Assignment  of  Contract.    Endorsement  Form. 

For  and  in  consideration  of  One  Dollar  and  of  other  sufficient  con- 
siderations, the  receipt  of  all  which  is  hereby  acknowledged,  the  Sterling 
Power  Company  does  hereby  sell,  assign  and  transfer  to  the  Cohoes  Light 
and  Power  Company  the  within  contract  with  all  the  rights,  privileges, 
obligations  and  undertakings  thereof  as  therein  set  forth. 

In  Witness  Whereof,  the  signature  and  the  attested  seal  of 
the  said  Sterling  Power  Company  are  hereunto  affixed  by 
its  duly  authorized  officers  this   16th  day  of  November, 
1908. 
( CORPORATE   I  Sterling    Power    Company, 

i     SEAL.        )  By  Miller  Sterling. 

President. 
Attest  seal: 

Henry  Welling, 

Secretary. 

The  patent  assignment  which  follows  is  in  general  ac- 
cord with  the  forms  approved  by  the  Patent  Office. 


368  MISCEjLIvANEOUS  I^ORMS. 

Form   189. — Assignment  of  Patent.     Individual  to  Cor- 
poration. 

Assignment  of  Patent. 


Whereas,  I,  Alan  Hudson,  of  Newburgh,  County  of  Orange,  State  of 
New  York,  did  obtain  letters  patent  of  the  United  States  for  an  improve- 
ment in  Car  Couplings,  which  letters  patent  are  numbered  605,948,  and 
bear  date  the  6th  day  of  November  in  the  year  1908;  and 

Whereas,  I  am  now  the  sole  owner  of  said  patent,  and  of  all  rights 
under  the  same ;  and 

Whereas,  The  Montauk  Car  Coupler  Company,  a  corporation  duly 
organized  under  the  laws  of  the  State  of  New  Jersey,  and  having  its  prin- 
cipal office  and  place  of  business  at  No.  15  Exchange  Place,  Jersey  City, 
New  Jersey,  is  desirous  of  acquiring  the  entire  interest  in  the  same  to- 
gether with  all  claims  for  profits  and  damages  arising  from  past  infringe- 
ments thereof,  and  the  right  to  sue  for  and  recover  in  its  own  name  on  all 
claims  for  such  infringements : 

Now,  Therefore,  To  all  whom  it  may  concern,  be  it  known,  that  for 
and  in  consideration  of  the  issue  to  my  order  by  the  said  Montauk  Car 
Coupler  Company  of  its  entire  capital  stock,  excepting  Ten  (10)  Shares 
heretofore  issued  to  the  incorporators  of  said  Company,  the  receipt  of 
which  aforesaid  stock,  amounting  to  Ninety-nine  Thousand  ($99,000) 
Dollars,  is  hereby  acknowledged,  I,  the  said  Alan  Hudson,  have  sold,  as- 
signed and  transferred,  and  by  these  presents  do  sell,  assign  and  transfer, 
unto  the  said  Montauk  Car  Coupler  Company,  the  whole  right,  title  and 
interest  for  the  United  States,  its  colonies  and  dependencies,  in  and  to  the 
said  improvement  in  car  couplings,  and  in  and  to  the  letters  patent  there- 
for aforesaid;  and  the  inventions  covered  thereby,  together  with  all  claims 
for  profits  and  damages  arising  from  past  infringements  of  the  said  letters 
patent,  and  the  right  to  sue  and  recover,  in  its  own  name,  on  all  claims  for 
such  infringements,  the  same  to  be  held  and  enjoyed  by  the  said  Montauk 
Car  Coupling  Company  for  its  own  use  and  behoof,  and  for  the  uses  and 
behoof  of  its  legal  representatives,  successors  and  assigns,  to  the  end 
of  the  term  for  which  said  letters  patent  are  or  may  be  granted,  as  fully 
and  entirely  as  the  same  would  have  been  held  and  enjoyed  by  me  had 
this  assignment  and  sale  not  been  made. 

In  Testimony  Whereof,  I  have  hereunto  set  my  hand  and 
affixed  my  seal  at  Newburgh,  County  of  Orange,  State 
of  New  York,  this  4th  day  of  December,  1908. 

Alan  Hudson.        [L.  S.] 
In  presence  of 

Jacob  Ellis. 
Hendrick  N.  Enslow. 

An  assignment  of  patent  does  not  require  notarial  ac- 
knowledgment under  the  rules  of  the  Patent  Office,  but,  as 
an  acknowledgment,  as  already  stated,  is  prima  facie  evi- 
dence of  the  due  execution  of  the  instrument,  it  is  usually- 
affixed. 


CHAPTER  XLI. 
BOOKS  OF  RECORD. 


(a)  Transfer  Book. 

The  transfer  book  contains  blank  forms  of  assignments, 
which  when  properly  filled  effect  the  specified  transfers  of 
stock,  and  also  afiford  a  formal  record  of  these  transfers. 
(See  §§  33,  34,  36-39.)  The  following  form  of  transfer 
book  is  generally  used  by  corporations  in  which  stock 
transfers  are  not  frequent. 

Form  190. — Transfer  Book. 

NEWARK   TRANSPORTATION    COMPANY. 
Ledger  Folio  35.  Transfer  No.  125. 


For  Value  Received,  I  hereby  sell,  assign  and  transfer  to  John  H. 
Sheldon  of  New  York  City,  Fifty  (50)  Shares  of  the  Capital  Stock  of  the 
above-mentioned  Company  now  standing  in  my  name  on  the  Company's 
books  and  represented  by  surrendered  certificates  Nos.  62,  63. 

Witness  my  hand  and  seal  this   15th  day  of  August,  1908, 
at  Newark,  New  Jersey. 

Harold  Fiske,  [L.  S.] 

By   Leonard   Gorham, 

Attorney. 
New  Certificates  Nos.  135,  136,  137 
Issued  to  John  H.  Sheldon. 
Ledger  Folio  64. 

(See  §  36.) 
The  ledger  folio  in  the  upper  left-hand  corner  of  the 
form  given  indicates  the  stock  ledger  page  on  which  ap- 
pears the  account  of  the  party  assigning  the  stock.  The 
ledger  folio  below  gives  the  stock  ledger  page  on  which 
the  account  of  the  assignee  appears.  As  the  numbers  of 
both  the  surrendered  and  issued  certificates  also  appear, 
reference  is  easy  to  the  stock  certificate  stubs  on  which  the 
transaction  is  again  recorded. 

369 


370  MISCELLANEOUS  EORMS, 

Form  191. — Transfer  Book.     Condensed  Form. 


We,  the  transferrers  hereunder,  owners  of  record  of  the  Capital  Stock 
entered  below,  do  by  attorney  undersigned,  hereby  respectively  sell,  assign 
said  Company  set  opposite  our  respective  names,  all  as  set  forth  below. 


Certificates 

Certificates 

Date. 

Surrendered. 

Transferrer. 

Ledger 
Folio. 

Issued. 

Numbers 

Shares 

Numbers 

Shares. 

1908 

Oct.  1 

175 

50 

Henry  H.  Brown 

48 

862 

50 

2 

365 

75 

Farrell  T.  Smith. 

400 

|863 
1864 

50 
25 

Frequently  the  transfers  of  this  form  of  transfer  book 
are  provided  with  stubs,  upon  which  also  appear  the  data 
relating  to  the  transfer.  As  the  transfers  remain  in  the 
book,  and  are  available  at  any  time  for  reference,  such 
stubs  are  entirely  unnecessary. 

Another  form  of  transfer  book  used  by  the  larger  cor- 
porations is  given  in  Form  191.  This  shows  the  upper  por- 
tion of  a  page.  The  blanket  assignment  at  top  enables  the 
record  of  each  transfer  to  be  made  on  a  single  line.  (See 
§36.) 

In  the  entries  shown,  the  second  transferrer  has  sur- 
rendered a  single  certificate  for  seventy-five  shares  to  be 
issued  to  two  different  parties,  and  two  partial  entries  are 
therefore  necessary.  If  a  single  party  surrendered  several 
certificates  to  make  up  the  total  number  of  shares  to  be 
transferred,  each  certificate  may  be  entered  on  a  separate 
line,  or,  if  not  too  numerous,  the  certificate  numbers  and 
amounts  may  be  interlined  so  that  the  entire  transaction 
appears  on  a  single  line  of  the  record. 


BOOKS  OF  RJeCORD. 


371 


of  the  Harris  Smelting  Company  represented  by  the  surrendered  certificates 
and  transfer  to  the  transferees  indicated,  the  number  of  shares  of  stock  of 


Transferee. 

Ledger 
Folio. 

Address. 

Signature  of 
Attorney. 

Frank  T.  Lord... 
John  H.  McLane. 
H.  T.  Maxwell.. 

150 
170 
162 

170  Broadway,  N.  Y 

Bound  Brook,  N.  J 

185  West  End  Ave.,  N.  Y. 

Howard   H.   Benson 
Howard   H.   Benson 
Howard   H.   Benson 

(b)  Stock  Book  and  Stock  Ledger. 

The  following  forms  of  stock  book  and  stock  ledger 
comply  with  the  requirements  of  the  statutes  in  almost 
every  state  of  the  Union.    (See  §  35.) 

Form  192  (page  372)  represents  the  upper  portion  of  a 
page  from  the  combined  stock  book  and  stock  ledger.  The 
leaves  of  the  book  are  usually  indexed,  and  the  accounts 
arranged  in  alphabetical  order — in  New  York  and  some 
few  other  states  as  a  matter  of  statutory  requirement ;  else- 
where as  a  matter  of  convenience.  If  the  stock  is  not  ac- 
tive, more  than  one  account  may  appear  on  a  page,  each 
account  being  separated  from  the  one  that  follows  by  a 
heavy  single  or  double  line. 

One  line  across  the  entire  page  of  this  ledger  is  devot- 
ed to  each  transaction  whether  a  purchase  or  a  sale.  In 
the  second  column,  if  stock  is  purchased,  is  entered  the 
name  of  the  stockholder  from  whom  the  stock  is  trans- 
ferred, but  if  stock  is  sold,  the  name  of  the  party  to  whom 
the  certificate  is  issued.    The  third  column,  "Amount  Paid 


372 


MISCEI/LANEOUS  ?ORMS. 


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BOOKS  OF  RECORD.  373 

Thereon" — has  no  reference  to  the  amount  paid  for  the 
stock  by  the  party  purchasing  save  in  case  of  original  issue. 
It  is  merely  intended  to  show  the  amount  received  by  the 
corporation  on  the  stock  transferred,  thereby  indicating 
the  amount,  if  any,  still  due  to  the  corporation.  The  rec- 
ord of  this  column  is  ordinarily  of  little  or  no  value.  It 
is  included  in  the  present  form  merely  in  compliance  with 
the  statutory  requirements  of  some  few  of  the  states. 

The  fourth  column  shows  the  number  of  the  certificate 
issued  to  the  party  when  he  acquires  stock;  the  fifth  col- 
umn the  numbers  of  the  certificates  surrendered  by  him 
when  he  disposes  of  stock.  If  he  sells  but  a  portion  of  the 
stock  represented  by  a  certificate — as  in  the  third  entry  of 
the  form  given — the  number  of  the  new  certificate  issued 
to  him  for  the  balance  of  the  unsold  stock  is  entered  in  the 
fourth  column. 

In  the  sixth  column  is  entered  the  number  of  shares  dis- 
posed of  when  sales  are  made,  and  in  the  seventh  column 
the  number  of  shares  acquired  when  stock  is  purchased. 
These  two  last  columns  constitute  the  stock  ledger  proper, 
and  the  amount  of  stock  belonging  to  the  party  with  whom 
the  account  is  kept  may  be  found  by  taking  the  difference 
between  the  footings  of  these  columns. 

It  sometimes  happens  that  a  party  acquiring  stock,  in- 
stead of  directing  its  issue  to  himself  in  a  single  certificate, 
will  have  it  issued  in  a  number  of  certificates.  The  entry 
in  the  stock  book  then  varies.  Sometimes  a  separate  line 
is  devoted  to  each  certificate  issued,  but  the  method  is  cum- 
brous. If  the  number  of  certificates  issued  is  small,  the 
transaction  may  be  entered  on  a  single  line,  all  the  certif- 
icate numbers  appearing  in  the  proper  space  in  the  fourth 
column  in  small  figures;  or  two  or  more  lines  might  be 
accorded  the  transaction  in  order  to  allow  room  for  the 
entry  of  these  numbers.  Where  the  number  of  certificates 
issued  is  very  large,  the  transaction  may  be  entered  on  a 


374 


MISC:ei.I.ANEOUS  IfORMS. 


single  line,  and  the  certificate  numbers  be  noted  at  the 
foot  of  the  page,  reference  thereto  appearing  in  the  fourth 
column  where  the  numbers  would  otherwise  have  been 
entered.  The  same  conditions  obtain,  and  the  arrangement 
of  the  entry  is  similar  when  a  number  of  certificates  are 
surrendered  for  cancellation  on  a  single  sale. 

Form  193. — Stock  Book  and  Ledger. 

NAME,  Joseph  C.  Campbeei.. 


To  Whom 
Transferred. 

Certificate  Nos. 

Number 

Date. 

Surren- 
dered. 

Reis- 
sued. 

of 
Shares. 

1908. 
July    10 
Aug.    15 
Sept.     1 

Albert   D.   Rogers 

W.  C.  Baker 

M.  P.  Frazer  

65 
45 

(135/ 

1 65  r 

.  125 

135 
180 



SO 
40 
90 

Dec.     5 
31 

Geo.  Kelley 

Balance 

40 
100 

320 

The  stock  book  and  stock  ledger  given  in  Form  193 
combines  in  compact  form  all  the  requisites  of  the  usual 
stock  ledger,  while  likewise  complying  with  the  statutory 
requirements  of  almost  every  state  of  the  Union. 

The  form  as  given  shows  the  upper  portion  of  a  page. 
The  leaves  of  this  book  are  indexed  to  facilitate  alphabeti- 
cal arrangement  of  the  accounts.  On  the  right-hand  side 
of  the  account  the  party  is  credited  with  stock  acquired, 
and  on  the  left-hand  side  is  debited  with  any  stock  dis- 
posed of  by  sale  or  otherwise.  The  difference  between  the 
two  sides  shows  at  any  time  the  amount  of  stock  standing 
in  his  name. 


BOOKS  OP  RECORD. 


375 


On  the  left  or  sales  side  of  the  account  the  third  column 
shows  the  numbers  of  the  surrendered  certificates,  the 
fourth  the  number  of  the  certificates  reissued  to  the  trans- 
ferrer in  case  but  a  portion  of  the  stock  represented  by  a 
surrendered  certificate  is  sold.  The  fifth  column  shows  the 
number  of  shares  sold.     On  the  right-hand  or  credit  side, 


RESIDENCE,  Ridgewood,  New  Jersey. 


Date. 


1908. 
June     1 

"  IS 
July  18 
Aug.  1 
Sept.  15 


From  Whom 
Transferred. 


Original  Issue. 
J.  G.  Cameron. 
H.  C.  Dewey.. 
J.  B.  Stewart. 
H.  C.  Cornell. 


Amount 

Paid 
Thereon. 


Full-paid 


Issued 
Certifi- 
cate Nos. 


45 

65 

75 

125 

175 


Number 

OF 

Shares. 


100 
50 
80 
40 
SO 


320 


the  second  column  gives  the  name  of  the  party  whom  the 
purchased  stock  was  transferred.  The  fourth  shows  the 
number  of  the  certificates  issued  to  the  party  in  whose 
name  the  account  stands,  and  the  last  column  shows  the 
number  of  shares  acquired. 

The  third  column  on  the  right-hand  side — "Amount 
Paid  Thereon" — is  put  in  solely  in  compliance  with  the 
requirements  of  New  York,  and  some  few  other  states,  as 
explained  in  connection  with  Form  192.  Its  record  is  of 
but  little  importance,  and  the  column  may  be  omitted  to 
advantage  when  not  required  by  statute. 

Should  a  number  of  certificates  be  issued  or  surren- 


Z76 


miscelIvAne;ous  i^orms. 


dered  in  a  single  transaction,  the  entry  or  entries  may  be 
arranged  as  explained  for  the  preceding  form  of  stock 
book  and  stock  ledger,  and  as  shown  in  the  third  entry  on 
the  sales  side  of  the  present  form. 

In  some  few  states  when  stock  is  subscribed  for  and 
the  subscription  price  is  to  be  paid  in  instalments,  the  in- 
stalments due  and  paid  must  be  shown  by  the  stock  ledger. 
Two  ledger  columns  must  then  be  added  to  the  stock 
book  and  stock  ledger.  Instalments  coming  due  are  then 
debited  in  the  left-hand  column  and  payments  are  credited 
in  the  right-hand  column,  all  in  usual  ledger  form. 

(c)  Financial  Records. 

Form  194. — Instalment  Book. 

INSTALMENT    BOOK. 
Instalment  No.  3  of  10  per  cent.     Due  Nov.  1,  1908. 


Subscribers' 
Names. 

Shares. 

Amount. 

Interest. 

Paid. 

When 
Paid. 

Abbott,   John 

Benton,   William   H 
Brown,  Howard 

75 
50 
60 

$750.00 
500.00 
600.00 

$1.25 

$750.00 
501.25 
600.00 

Nov.     1 
Nov.  15 
Oct.   27 

(See  §  167.) 
The  puipose  of  the  instalment  book  is  to  record  each 
instalment  of  subscriptions  as  it  becomes  due.  According- 
ly the  page  or  pages  on  which  an  instalment  is  entered 
must  be  headed  in  accordance  with  the  facts.  In  the  first 
column  appear  the  subscribers'  names  arranged  alphabet- 
ically. The  second  column  is  intended  for  the  ledger  folio 
which  need  only  be  entered  when,  as  is  the  case  in  some 
states,  instalment  payments  must  be  posted  to  the  stock 
ledger.  The  third  column  gives  the  number  of  shares  sub- 
scribed for;  the  fourth  column  the  amount  of  the  particu- 
lar instalment;  the  fifth  column  any  interest  due  in  case 


BOOKS  OF  RECORD. 


377 


payment  of  the  instalment  is  delinquent ;  the  sixth  column 
the  amount  paid,  and  the  seventh  the  date  of  payment. 
An  additional  column  is  sometimes  added  for  comments. 

The  cash  received  on  instalment  payments  will  also  ap- 
pear on  the  stubs  of  the  instalment  scrip  book  as  the  cer- 
tificates are  issued  (See  Form  8),  and  the  footing  of 
column  six  of  the  stock  instalment  book  should  therefore 
agree  with  the  sum  of  the  similar  payments  shown  on 
the  stubs  of  the  instalment  scrip  book. 

Form  195. — Dividend  Book. 


DIVIDEND  BOOK. 

Dividend  No.  5  of  2%.     Declared  Nov.   1,   1908.     Payable   Dec.   15,   1908, 

to  Stockholders  who  appear  of  Record  Dec.  1,  1908. 


Stockholders' 

Names. 

Shares. 

Amount. 

Paid. 

Received  By. 

Alsop,  John  H 

Harrington,    Harvey. 

50 
25 

$100.00 
50.00 

Dec.  18 
Dec.   15 

John  H.  Alsop. 
Howard    Jones,    Atty. 

(See  §  168.) 
Usually  the  dividend  book  is  employed  only  when 
stockholders  are  required  to  call  in  person  and  receive  and 
receipt  for  dividends.  Each  dividend  as  declared  is  re- 
corded on  one  or  more  pages,  a  statement  of  the  facts  ap- 
pearing at  the  head  of  the  uages  of  the  particular  record. 
The  form  is  simple  and  its  method  obvious.  Stockhold- 
ers' names  are  arranged  alphabetically,  and  the  signatures 
appearing  in  the  last  column  serve  as  a  receipt  for  the  divi- 
dend payment.  A  signature  by  an  attorney,  as  in  the  sec- 
ond example,  is  not  sufficient  unless  authorized  by  due 
power  of  attorney  filed  with  the  treasurer  of  the  company. 
(See  Form  179.) 


CHAPTER  XLII. 
BONDS  OF  INDEMNITY. 


(a)  Treasurer's  Bond. 

The  treasurer's  bond  is  the  formal  undertaking  of 
parties  named  therein  and  by  whom  the  bond  is  signed, 
that  in  event  of  loss  arising  from  specified  acts,  failures  or 
omissions  on  the  part  of  the  treasurer,  they  will  make  good 
the  loss  up  to  the  amount  of  the  bond.  (See  §  154.) 
Formerly  bonds  of  this  nature  were  almost  invariably 
signed  by  the  treasurer  and  his  friends.  Of  recent  years, 
however,  surety  company  bonds  have  largely  superseded 
these  personal  bonds. 

The  following  is  a  common  form  of  personal  bond. 

Form  196. — Treasurer's  Bond.     Personal. 

TrEasuri^r's  Bond. 


Know  All  Men  by  These  Presents  : 

That  we,  Robert  A.  Bruce  of  New  York  City,  as  principal,  and 
William  H.  Cain  of  Newark,  New  Jersey,  and  H.  B.  McMillan  of  Brook- 
lyn, New  York,  as  sureties,  are  held  and  firmly  bound  unto  the  Sterling 
Transportation  Company,  a  corporation  duly  organized  under  the  laws 
of  the  State  of  New  York,  in  the  sum  of  Ten  Thousand  ($10,000)  Dol- 
lars, to  the  payment  of  which  to  the  said  corporation,  its  successors  or 
assigns,  we  do  by  these  presents  jointly  and  severally  bind  ourselves,  our 
heirs,  executors  and  administrators. 

Signed  and  sealed  this  15th  day  of  August,  1908. 

The  condition  of  the  above  obligation  is  that : 

Whereas,  The  said  Robert  A.  Bruce  has  been  elected  Treasurer  of 
the  said  Sterling  Transportation  Company  for  the  period  of  one  year 
from  the  10th  day  of  August,  1908,  and  may  hereafter  be  re-elected  to  or 
continue  in  such  office  for  a  further  period : 

Now,  Therefore,  If  the  said  Robert  A.  Bruce  shall  hereafter  in  all 
respects  fully,  faithfully  and  honestly  perform  and  discharge  the  duties  of 

378 


BONDS   OF   INDEMNITY.  379 

said  office  so  long  as  he  shall  continue  therein,  both  during  the  term  for 
which  he  has  been  elected  and  during  such  further  time  as  he  may  con- 
tinue therein,  whether  by  re-election  or  otherwise,  and  shall  when  properly 
so  required,  fully  and  faithfully  account  to  the  said  corporation,  its  suc- 
cessors or  assigns,  for  all  moneys,  goods  and  properties  whatsoever,  for 
or  with  which  the  said  Robert  A.  Bruce  may  in  anywise  be  accountable 
or  beholden  to  the  said  corporation,  and  if  at  the  expiration  of  his  term  of 
or  continuance  in  office,  or  prior  thereto  in  the  event  of  his  death,  resig- 
nation or  removal  from  office,  all  books,  papers,  vouchers,  money  and  other 
property  of  whatever  kind  placed  in  his  custody  as  Treasurer  of  said 
corporation,  shall  be  forthwith  restored  to  the  said  corporation,  its  suc- 
cessors or  assigns,  then  this  obligation  shall  be  void,  but  otherwise  to  re- 
main in  full  force  and  effect. 

Robert   A.   Bruce.  [L.  S. 

William  H.  Cain.  [L.  S. 

H.  B.  McMillan.  [L.  S." 

Signed,  sealed  and  delivered 
in  the  presence  of 
John  J.  Barr. 
W.  H.  Carpenter. 


The  treasurer's  bond  must  be  given  under  seal,  and, 
while  not  legally  necessary,  personal  bonds  are  usually  ac- 
knowledged. 

Personal  bonds  are  usually  sweeping  in  their  nature, 
covering  any  and  all  losses  arising  through  any  errors,  mis- 
deeds or  omissions  of  the  treasurer.  When,  however,  a 
surety  company  enters  the  bonding  field,  the  guarantees 
are  reduced  to  the  lowest  possible  terms, — usually  to  losses 
arising  through  the  personal  dishonesty  of  the  employee 
amounting  to  "larceny  or  embezzlement."  The  forms  for 
these  bonds  are  furnished  by  the  surety  companies  and 
vary  according  to  the  company  and  the  conditions.  The 
general  form  employed  is  too  lengthy  for  reproduction  in 
the  present  volume. 


(b)  Bond  for  Lost  Stock  Certificate. 

When  a  stock  certificate  is  lost  or  destroyed,  a  bond  of 
indemnity  is  usually  required  before  the  corporate  au- 
thorities will  replace  the  lost  certificate.     (See  §  41.) 


380  MISCEIXAICEOUS  FORMS. 

Fonn  197. — ^Iiideiiimty  Bond.     Lost  Stock  Certificate. 

IjfDEMXITY   BOXDI 


Kxow  Au.  Mex  by  These  Presents: 

That  we,  Jcbn  R.  McAllister  of  Yonkers,  New  York,  as  principal,  and 
Chailes  Foster  and  Ueniy  H.  Clark,  both  also  of  Yonkers,  New  York,  as 
sordties,  are  held  and  linnly  bound  unto  the  Sterling  Transportation  Com- 
paonj,  a  corporaticM)  dnly  oiganized  under  the  laws  of  the  State  of  New 
Yoik,  in  the  sum  of  Fhre  Thousand  ($5,000)  Dollars,  to  the  payment  of 
wliicfa  to  the  said  corporaticxi,  its  successors  or  assigns,  we  do  by  these 
presents  jointly  and  severally  bind  onrsdres,  our  heirs,  executors  and 
administrators. 

Signed  and  sealed  this  18th  day  of  S^tember,  1908. 

The  canditi<Ni  of  the  foregoing  obUgation  is  that : 

WHEKCi^  The  said  John  R.  McAllister  is  the  owner  of  record,  as 
shown  by  the  stock  book  of  the  corporaticm,  of  Forty  (40)  Shares  of  the 
Common  Capital  Stock  of  the  said  Sterling  Transportation  Company,  each 
of  the  par  value  of  One  Hundred  ($100)  Dollars,  the  ownership  of  said 
stock  being  further  evidenced  by  Certificate  No.  375  issued  in  the  name  of 
the  said  Jokm  R.  McAllister  on  the  15th  day  of  August,  1906;  and 

Whebeas,  The  said  John  R.  McAllister  has  made  appUcatioa  to  the 
Board  of  Directors  of  the  Sterling  Transportatimi  Company  for  the  is- 
sue in  his  name  of  a  new  certificate  for  the  said  Forty  (40)  Shares  of 
stock  of  the  said  Company,  alleging  that  original  Certificate  Xo.  375  is 
kist,  stolen  or  destroyed  and  that  its  present  whereabouts  and  condition 
are  unknown  to  him;  and 

Whskeas,  By  due  and  formal  resoluticm  of  the  said  Board  of  Direc- 
tors, said  appUcation  has  beoi  granted  and  a  new  certificate  for  said 
Forty  (40)  Shares  of  the  stock  of  the  said  Sterling  Transportation  Com- 
pany has  this  day  been  issued  to  the  said  John  R.  McAllister: 

Now,  Thekefoke,  If  the  said  Jc^n  R.  McAllister,  his  heirs,  executors 
and  administrators,  or  any  of  them,  do  and  shall  at  all  times  hereafter, 
save,  defend  and  indemnify  the  said  Sterling  Transportation  Company, 
its  kgal  successors  or  assigns,  of,  from  and  against  all  demands,  claims 
or  causes  of  action  arising  frcmi  or  on  account  of  the  loss  of  said  Certif- 
icate No.  375  for  Forty  (40)  Glares  of  the  Common  (Capital  Stodc  of  said 
CcMi^any  and  the  issue  of  said  new  certificate  in  place  thereof,  and  of  and 
from  all  costs,  damages  and  expenses  that  shall  or  may  arise  because  of 
said  reissue,  and  shall  also  deliver  or  cause  to  be  delivered  up  to  the  said 
Sterling  Transportation  Company  for  cancellation  the  said  missing  Cer- 
tificate No.  3^  whenever  and  so  soon  as  the  same  shall  be  found  or  re- 
covered, or  come  into  his  possessifm,  dien  this  obligation  shall  be  void; 
otherwise  to  remain  in  full  force  and  effect. 

JoHx  R.  McAujsTER.        [L.S.] 
Ch.juujes   Foster.  [L.  S.] 

Hexry  H.  CXark.  [L.S.] 

Signed,  sealed  and  delivered 

in  the  presence  of 
Dahixl  T.  B-airr 
JoHK  K.  Stone. 


CHAPTER  XLIII. 
THE  CORPORATE  CALENDAR. 


The  corporate  calendar  is  an  orderly  statement  of  the 
important  corporate  formalities  that  must  be  attended  to 
at  fixed  periods,  so  arranged  that  the  secretary  may  at  any 
time  by  a  mere  glance  see  just  what  corporate  duties  re- 
quire his  attention. 

The  amount  of  detail  entered  on  the  corporate  calendar 
will  vary  according  to  the  preference  of  the  particular  sec- 
retary, from  a  mere  skeleton  outline  of  the  reports  and 
notices  required  bj-  the  statutes  and  by-laws,  to  a  fairly 
complete  digest  of  corporate  procedure.  It  is  advantage- 
ous to  enter  reasonably  full  details,  as  much  subsequent 
research  may  thereby  be  avoided. 

The  corporate  calendar  is  frequently  entered  in  the 
minute  book.  More  conveniently  it  is  prepared  on  a  spe- 
cial card  or  cards,  or  on  a  desk  calendar,  in  either  case  so 
placed  or  hung  that  it  is  plainly  in  sight.  Or  if  the  min- 
ute book  plan  is  preferred,  a  small  skeleton  calendar  or 
"tickler"  may  be  prepared  in  addition,  which,  kept  on  the 
desk,  will  call  attention  to  the  dates  upon  which  the  cal- 
endar in  the  minute  book  should  be  consulted. 

The  calendar  which  follows  is  given  merely  to  show  the 
general  plan  and  the  matter  which  is  usually  included.  It 
is  arranged  for  a  New  York  corporation  having  its  prin- 
cipal place  of  business  in  the  City  of  New  York  and  hold- 
ing its  annual  meeting  of  stockholders  on  the  second  Tues- 
day of  January*  at  3  P.  M..  with  quarterly  meetings  of  di- 
rectors on  the  second  Wednesday  of  January-,  April,  July 
and  October  at  4  P.  M.     Its  by-laws  require  ten  days' 

381 


382  misce;i,i,aneous  i^orms. 

notice  of  annual  meetings  and  five  days'  notice  of  directors' 
meetings.  Its  stock  book  is  closed  twenty  days  before  the 
annual  meeting. 

It  will  be  noticed  that  under  this  arrangement  the 
January  directors'  meeting  will  usually  fall  on  the  day 
following  the  annual  meeting  at  which  directors  are 
elected.  If  then,  this  election  is  duly  held,  the  regular 
notice  of  the  directors'  meeting  is  of  no  effect  as  to  the 
newly  elected  directors,  and,  if  the  by-laws  are  mandatory 
as  to  notice,  the  meeting  must  be  postponed  or  omitted, 
or  the  secretary,  disregarding  the  notice  already  given, 
may  provide  for  the  meeting  of  the  board  on  the  proper 
date  by  means  of  a  call  and  waiver  signed  by  all  the  newly 
elected  directors.     (See  §§  127-129;  Form  48.) 

In  the  calendar  which  follows  the  date  for  each  cor- 
porate act,  as  filing  reports,  payment  of  taxes,  etc.,  is  in 
most  cases  entered  fifteen  days  in  advance  of  the  last  day 
allowed  by  law,  while  a  memorandum  is  also  entered  as  a 
precautionary  measure  on  the  last  day.  Thus,  a  report 
that  may  be  deferred  if  desired  until  the  31st  day  of  Jan- 
uary, is  entered  on  the  calendar  under  date  of  January 
i6th.  This  is  a  matter  that  may  be  varied  to  suit  the  in- 
dividual. 

Form  198. — Corporate  Calendar.     New  York. 

Corporate  Calendar 

of  the 

HUDSON    RIVER    PACKING    COMPANY 

of  New  York  City. 

1909. 


January. 

2nd.    Franchise  Tax  Payable.    Must  be  paid  before  January  15th. 

Based    upon    November    report    to    State    Comptroller. 

Statement    of   amount    of   tax    is    sent    to    Company  by 

State  Comptroller.     Checks  should  be  made  payable  to 

State  Treasurer. 
Notifv  Stockholders  of  annual  meeting  to  be  held  January 

12th. 
8th.     Notify  Directors  of  meeting  to  be  held  January   13th.     If 

directors  are  elected  at  annual  meeting  (January  12th), 


THE  CORPORATE   CALENDAR. 


383 


11th. 


12th. 
13th. 


ISth. 
16th. 


30th. 


March. 


April. 


July. 


16th. 


31st. 


9th. 
14th. 

9th. 
14th. 


October. 


4th. 

8th. 
13th. 
16th. 


November. 
1st. 


December. 
22nd. 


this  notice  will  be  vitiated  as  to  all  directors  elected  at 
such  meeting  and  must  be  replaced  by  waiver  of  notice 
signed  after  election  by  all  the  newly  elected  directors. 

City  Assessmetits  made  for  1909  (second  Monday  in  Jan- 
uary). Books  open  for  correction  till  March  31st  in- 
clusive. If  notice  of  assessment  is  not  received  in  the 
early  part  of  January,  it  should  be  sent  for.  Tax  Com- 
missioners usually  send  notice  but  are  under  no  obliga- 
tion to  do  so. 

Annual  Meeting  of  stockholders  at  3  P.  M. 

Directors'  Meeting  at  4  P.  M.  If  directors  were  elected  at 
annual  meeting,  waiver  of  notice  should  be  signed  by 
each  new  director. 

Last  Day  for  payment  of  State  Franchise  Tax.  Also  on  this 
date  unpaid  city  tax  bills  for  personal  taxes  may  be  sent 
Marshall  for  collection. 

Annual  Report  to  State  officials.  Must  be  filed  during  Jan- 
uary and  not  later  than  January  31st  with  Secretary  of 
State.  No  filing  fees.  Blanks  not  supplied  by  officials. 
No  penalty  incurred  for  omission  of  the  report  unless 
such  filing  is  requested  by  some  stockholder  or  creditor 
of  the  Company,  and  not  then  if  the  report  is  filed  within 
thirty  days  after  the  request  is  made. 

Last  Day  for  filing  annual  report,  January  31st  falling  on 
Sunday. 

Statement  and  Application  for  revision  of  unsatisfactory  as- 
sessments, if  not  already  filed,  should  be  sent  in  to  the 
Commissioner  of  Taxes  and  Assessments.  Will  not  be 
received  after  March  31st  save  for  real  estate.  Blanks 
furnished  by  Commissioners.     No  filing  fees. 

Last  Day  for  filing  application  for  revision  of  city  asses- 
ments,  save  on  real  estate,  which  may  be  revised  at  any 
time  before  payment  of  the  tax. 

Notify  Directors  of  meeting  to  be  held  April  14th. 
Directors'  Meeting  at  4  P.  M. 

Notify  Directors  of  meeting  to  be  held  July  14th. 
Directors'  Meeting  at  4  P.  M. 

City  Taxes  Payable.  Statement  of  amount  may  be  ob- 
tained from  Assessors'  office. 

Notify  Directors  of  meeting  to  be  held  October  13th. 

Directors'  Meeting  at  4  P.  M. 

City  Taxes.  If  not  paid  by  November  1st,  1909,  draw  inter- 
est at  the  rate  of  7%  per  annum,  computed  from  the 
first  Monday  in  October,  1909. 

Comptroller's  Report.  Must  be  sent  in  on  or  before  No- 
vember 15th.  Blanks  furnished  by  and  report  made  to 
State  Comptroller.  No  filing  fees.  Penalty  may  be 
incurred  by  failure  to  make  this  report. 

Close  Transfer  Books  for  annual  meeting  of  January  11th, 
1910. 


CHAPTER  XLIV. 
CORPORATE  BOND  ISSUES. 


The  more  important  instruments  involved  in  an  issue 
of  corporate  bonds  are  the  bond  itself,  which  is  com- 
paratively simple  in  form,  and  the  mortgage  or  deed  of 
trust,  w^hich  is  lengthy  and  complex. 

The  corporate  bond  in  its  usual  form  is  a  promissory 
note,  differing  from  the  ordinary  corporate  note  only  in 
its  formality,  its  more  complete  statement  of  the  condi- 
tions under  which  it  is  issued,  its  formal  execution  and  in 
its  being  one  of  a  series  secured  by  the  same  collateral. 
(See  Form  199.) 

There  is  practically  no  difference  as  to  form  between 
the  bond  and  the  short  term  note  so  frequently  issued  by 
corporations  of  the  present  day,  save  as  to  the  length  of 
time  for  which  they  run.  The  short  term  note,  as  its 
name  indicates,  is  usually  given  for  a  short  period — one 
to  five  years — while  the  bond  usually  extends  over  a  much 
longer  period,  ranging  from  five  to  one  hundred  years  or 
more. 

Interest  on  bonds  is  usually  represented  and  provided 
for  by  means  of  coupons,  which  are  in  effect  promissory 
notes,  payable  to  bearer,  each  calling  for  the  payment  of 
one  instalment  of  interest  on  the  bonds.  (See  Form  200.) 
This  interest  when  due  is  payable  only  on  surrender  of 
the  proper  coupon  and,  in  the  absence  of  some  good  rea- 
son otherwise,  such  as  notice  that  the  particular  coupon 
has  been  stolen,  is  payable  to  anyone  who  presents  the 
coupon. 

384 


BOND   ISSUES.  385 

Interest  on  bonds  is  usually  payable  semi-annually  and 
each  of  the  coupons  of  a  coupon  bond  calls  for  the  exact 
amount  of  one  of  the  semi-annual  interest  payments  on 
that  bond.  Thus  a  bond  running  ten  years  with  interest 
payable  semi-annually,  will  have  attached  to  it  twenty 
coupons.  Each  coupon  bears  the  same  number  as  its  bond 
for  purposes  of  general  identification,  but  also  has  a  serial 
number  or  some  specific  statement  indicating  the  order 
in  which  it  comes  dues,  and  the  particular  interest  pay- 
ment for  which  it  calls. 

Coupon  bonds  are  usually  made  payable  to  bearer,  and 
ownership  passes  by  delivery.  When  it  is  desired  that 
bonds  shall  not  pass  by  mere  delivery,  they  are  registered. 
i.  e.  issued  in  the  name  of  some  particular  person  as  is  a 
certificate  of  stock,  the  bond  thereafter  being  transferable 
only  on  the  books  of  the  company. 

Coupon  bonds  are  sometimes  registered  as  to  principal, 
but  the  coupons  are  still  made  payable  to  bearer.  The  in- 
terest then  is  paid  to  anyone  who  presents  the  coupon,  but 
the  principal  when  due  is  only  paid  to  the  person  in  whose 
name  the  bond  stands  on  the  books  of  the  company. 

Bonds  without  coupons  are  always  registered,  are 
transferred  only  by  assignment,  interest  is  payable  to  the 
registered  owner  alone,  and  is  usually  paid  by  check  sent 
out  to  these  registered  owners. 

Coupon  bonds  payable  to  bearer  and  registered  bonds 
without  coupons  are  often  issued  under  the  same  deed  of 
trust.  Usually  when  this  is  done,  the  two  classes  of  bonds 
are  made  interchangeable,  i.  e.,  the  holder  of  a  coupon 
bond  may  at  any  time  exchange  it  for  a  registered  bond,  or 
vice  versa.  The  advantage  of  the  unregistered  coupon 
bond  is  found  in  the  readiness  with  which  it  may  be  trans- 
ferred. The  advantage  of  a  registered  bond  lies  in  the 
difficulty  of  its  negotiation  in  case  the  bond  is  lost  or 
stolen. 


386  MISCEJLLANEOUS  FORMS. 

The  following  form  is  that  of  a  coupon  bond,  the  owner- 
ship passing  by  mere  delivery.  It  may,  however,  be  reg- 
istered at  the  option  of  the  owner  though  this  registration 
does  not  affect  the  coupons.  (See  Form  200.)  These  pass 
by  delivery  alone  and  are  payable  to  bearer  regardless  of 
whether  its  bond  be  registered  or  transferable  by  delivery. 

Form  199. — Coupon  Bond. 

United  States  oe  America. 

State  of  New  York. 

No.  375.  $500.00 

MAXWELL  COMPRESSOR  COMPANY. 

First   Mortgage,   Six   Per  Cent.,   Gold   Bonds. 

Know  All  Men  by  These  Presents,  That  the  Maxwell  Compressor 
Company,  a  corporation  organized  under  the  laws  of  the  State  of  New 
York,  for  value  received,  hereby  promises  to  pay  to  the  bearer  hereof,  or 
if  this  bond  is  registered,  to  the  registered  holder  thereof,  at  the  office 
of  the  Securities  Trust  Company  of  the  City  of  New  York,  on  the  first 
day  of  December,  nineteen  hundred  and  thirty-eight,  in  gold  coin  of  the 
United  States  of  America,  of  the  present  standard  of  weight  and  fineness, 
or  its  equivalent,  the  sum  of  Five  Hundred  Dollars,  without  deduction 
from  either  such  principal  or  interest  for  or  on  account  of  any  United 
States,  State,  municipal  or  other  tax  or  taxes  which  the  Maxwell  Com- 
pressor Company,  its  successors  or  assigns,  may  be  required  to  pay  or 
deduct  therefrom,  and  the  Maxwell  Compressor  Company  hereby  coven- 
ants and  agrees  to  pay  all  such  tax  or  taxes,  and  in  the  meantime  to  pay 
interest  upon  the  said  sum  of  Five  Hundred  Dollars  from  and  after  the 
first  day  of  December,  nineteen  hundred  and  eight,  at  the  rate  of  six  per 
cent,  per  annum,  payable  in  like  gold  coin,  or  its  equivalent,  at  the  same 
place,  semi-annually,  on  the  first  days  of  June  and  December  in  each  year, 
beginning  with  the  first  day  of  June,  1909,  on  presentation  and  surrender 
of  the  coupons  hereto  attached  as  each  of  them  becomes  due. 

This  bond  is  one  of  a  series  of  one  thousand  (1,000)  bonds  of  the 
same  tenor  and  date,  aggregating  five  hundred  thousand  ($500,000)  dol- 
lars, numbered  consecutively  from  one  to  one  thousand,  both  inclusive, 
for  the  sum  of  five  hundred  ($500)  dollars  each,  all  of  which  bonds  are 
secured  equally  by  a  deed  of  trust,  which  is  a  first  mortgage  upon  the 
properties  of  the  Maxwell  Compressor  Company,  executed  and  delivereci 
by  the  said  Maxwell  Compressor  Company  to  the  said  Securities  Trust 
Company,  as  Trustee,  granting  and  conveying  in  trust  and  mortgaging  as 
security  for  the  payment  of  the  principal  of  said  bonds  at  maturity,  at 
par,  and  the  interest  on  said  bonds,  payable  semi-annually  at  the  rate 
aforesaid,  all  the  real  estate  and  other  property  of  the  said  Maxwell  Com- 
pressor Company  mentioned  and  described  in  said  deed  of  trust,  with  full 
power  to  use  and  sell  the  same  in  the  event  of  default  in  payment  of  the 
bonds  or  coupons,  or  any  of  them,  and  apply  the  proceeds  to  the  payrnent 
of  same  as  in  said  deed  of  trust  provided.  This  bond  is  issued,  received 
and  held  subject  to  all  and  singular  the  terms  and  conditions  contained 
in  the  deed  of  trust  aforesaid. 

This  bond  is  further  secured  by  a  sinking  fund,  which  shall  consist  of 
and  be  maintained  by  the  payment  to  the  said  Securities  Trust  Company 


BOND   ISSUES.  387 

by  the  Maxwell  Compressor  Company  on  the  first  day  of  December,  1913, 
and  on  each  succeeding  first  day  of  December  thereafter,  until  the  re- 
demption of  all  the  bonds  issued  under  said  deed  of  trust,  of  twenty-five 
dollars  for  each  thousand  dollars  of  bonds  then  issued  and  outstanding, 
such  moneys  so  paid  to  be  used  in  the  purchase  of  outstanding  bonds  at 
the  lowest  price  at  which  they  may  be  had,  not  exceeding,  however,  one 
hundred  and  ten  per  centum  of  the  face  of  said  bonds  plus  accrued  interest, 
and  if  bonds  cannot  be  so  purchased,  such  moneys  shall  be  used  in  the 
redemption  of  the  bonds  outstanding,  as  hereinafter  provided. 

This  bond  shall  not  become  obligatory  until  the  certificate  endorsed 
hereon  shall  be  signed  by  the  Trustee,  and  when  so  authenticated  by  the 
signature  of  the  Trustee  the  title  to  said  bond  shall  pass  by  delivery,  un- 
less said  bond  is  registered,  and,  if  registered,  the  title  thereto  shall  pass 
only  by  transfer  on  the  books  of  said  Trust  Company,  and  no  transfer 
except  upon  said  books  shall  be  valid  unless  the  last  transfer  shall  have 
been  to  bearer,  which  shall  restore  transferability  by  delivery. 

This  bond  is  redeemable,  at  the  option  of  the  Maxwell  Compressor 
Company,  on  any  interest  day  at  any  time  after  the  first  day  of  December, 
1913,  at  110  per  cent,  of  its  face  value,  plus  accrued  interest,  provided  that 
thirty  days'  notice  of  such  redemption  shall  be  given  the  holder  thereof 
by  notice  published  once  a  week  for  four  consecutive  weeks  prior  to  such 
redemption,  in  a  newspaper  published  in  New  York  City. 

In  Witness  Whereof,  the  said  Maxwell  Compressor  Com- 
pany hath  caused  these  presents  to  be  signed  by  its  Presi- 
dent, and  its  corporate  seal,  duly  attested  by  its  Secretary, 
to  be  hereunto  affixed,  and  hath  hereunto  affixed  coupons 
with  the  name  of  its  Treasurer  engraved  thereon,  and 
hath  caused  this  bond  to  be  dated  the  first  day  of  De- 


(  CORPORATE  )      cember,  A.  D.  one  thousand,  nine  hundred  and  eight. 
(       SEAL.      )  Maxwell  Compressor  Company, 

Attest  : 


By  Howard  M.   Maxwell, 

President. 


Frank  Paulson, 
Secretary. 


The  coupon  form  which  follows  is  as  it  appears  attach- 
ed to  the  preceding  bond. 


Form  200. — Coupon. 


No.  1.  $15.00 

MAXWELL  COMPRESSOR  COMPANY 
will  pay  to  the  bearer  at  the  office  of  the  Securities  Trust  Company  of 
the  City  of  New  York  the  sum  of  fifteen   ($15)  Dollars,  in  United  States 
Gold  Coin,  or  its  equivalent,  on  the  first  day  of  June,   1909,  being  six 
months'  interest  on  its  First  Mortgage,  Six  Per  Cent.,  Gold  Bond  No.  375. 

William  H.  Powers, 

Treasurer. 

The  following  trustee's  certificate  is  as  it  appears  upon 
the  bond  shown  in  Form  199. 


388  MISCELLANEOUS  FORMS. 

Form  201. — ^Trustee's  Certificate. 

The  Securities  Trust  Company  of  the  City  of  New  York  hereby  cer- 
tifies that  the  within  Bond  is  one  of  the  series  of  Bonds  described  in  the 
Deed  of  Trust  therein  mentioned. 

Securities  Trust  Company  of  the 
City  of  New  York, 

Trustee. 
By  Malcolm  McDougald, 

President. 

■ H 

The  formalities  of  a  bond  issue  are  usually  regulated 
by  the  statutes  of  the  particular  state  in  which  the  corpor- 
ation is  organized.  Thus  in  New  York  an  issue  of  bonds 
requires  (i)  a  stockholders'  resolution  or  written  consent; 
(2)  a  certificate  of  the  corporate  officials  that  the  stock- 
holders' consent  has  been  given;  (3)  a  directors'  resolu- 
tion reciting  the  facts,  authorizing  the  officers  to  proceed 
in  the  matter,  and  providing  for  the  details  of  the  trans- 
action.^ 

In  some  states  the  mere  resolution  of  the  board  of  di- 
rectors is  sufficient  to  authorize  a  bond  issue.  In  a  large 
number  of  states  the  assent  of  a  prescribed  majority  of  the 
stockholders  is  a  requisite.  As  a  matter  of  prudence  and 
good  business,  a  proper  stockholders'  authorization  is  al- 
ways desirable  regardless  of  the  statute  requirements  of 
the  particular  state. 

The  following  deed  of  trust,  while  drawn  in  compliance 
with  the  requirements  of  the  New  York  statutes,  may  be 
readily  adapted  for  use  in  any  other  state. 

Form  202. — Deed  of  Trust. 

Deed  of  Trust. 


This  Indenture,  made  and  entered  into  this  12th  day  of  November, 
one  thousand  nine  hundred  and  eight,  by  and  between  the  Maxwell  Com- 
pressor Company,  a  corporation  duly  organized  and  existing  under  the 
laws  of  the  State  of  New  York,  having  its  office  at  No.  170  Broadway, 
New  York  City,  hereinafter  called  the  Compressor  Company,  party  of  the 
first  part,  and  the  Securities  Trust  Company  of  the  City  of  New  York, 

'  See  Harrison's   New  York   Corporations,   Forms,   64-67. 


BOND   ISSUES.  389 

a  corporation  duly  organized  and  existing  under  the  laws  of  the  State  of 
New  York,  having  its  principal  office  at  No.  98  Wall  Street,  New  York 
City,  as  Trustee,  hereinafter  called  the  Trustee,  party  of  the  second  part, 
Witnesseth : 

Whereas,  The  Board  of  Directors  of  the  said  Compressor  Company 
has,  by  the  authority  and  with  the  consent  of  the  stockholders  thereof 
legally  given,  duly  resolved  to  borrow  five  hundred  thousand  dollars  for 
the  lawful  business  purposes  of  the  said  Company,  and  for  that  purpose 
to  execute  and  issue  its  first  mortgage,  six  per  cent.,  thirty  years,  gold 
bonds  of  the  par  value  of  five  hundred  dollars  each,  dated  the  first  day 
of  December,  1908,  and  payable  on  the  1st  day  of  December,  1938,  in  gold 
coin  of  the  United  States  of,  or  equivalent  to,  the  present  standard  of 
weight  and  fineness,  said  bonds  to  bear  interest  at  the  rate  of  six  per 
cent,  per  annum,  payable  in  like  gold  coin,  semi-annually,  on  the  first  days 
of  June  and  December  in  each  year,  from  the  first  day  of  December,  1908, 
until  the  payment  of  the  principal  amount  thereof;  the  payment  of  the 
principal  and  interest  of  said  bonds  to  be  secured  by  a  mortgage  or  deed 
of  trust  that  shall  be  a  first  mortgage  on  the  entire  property  of  the  said 
Compressor  Company  as  hereinafter  described,  said  deed  of  trust  to  be  in 
substantially  the  form  of  this  indenture ;  and 

Whereas,  The  bonds  so  to  be  issued  are  to  be  in  substantially  the 
form  following,  viz. : 

{See  Form  199.) 
And  Whereas,  There  are  to  be  attached  to  each  of  the  said  bonds,  at 
the  time  of  the  issue  thereof,  coupons  representing  the  semi-annual  instal- 
ments of  interest  which  are  to  become  due  thereon,  each  of  which  coupons 
is  to  be  substantially  of  the  following  tenor,  the  proper  coupon  number, 
date  of  payment,  amount  of  the  bond  and  its  number,  and  the  engraved 
fac-simile  signature  of  the  Treasurer  of  the  Compressor  Company,  having 
been  inserted  in  the  respective  blanks  therefor,  to  wit : 

{See  Form  200.) 
And  Whereas,  On  each  of  said  bonds  there  is  to  be  endorsed  a  certifi- 
cate of  the  Trustee  or  its  successor  appointed  hereunder,  of  the  following 
tenor : 

{See  Form  201.) 

Now,  Therefore,  the  said  Compressor  Company,  in  consideration  of 
the  premises  and  of  the  sum  of  one  dollar  to  it  in  hand  paid  by  the  said 
Trustee,  the  receipt  whereof  is  hereby  acknowledged,  and  in  order  to 
secure  the  due  payment  of  the  principal  and  interest  of  the  bonds  to  be 
issued  hereunder,  and  to  insure  the  faithful  performance  of  the  covenants 
and  agreements  herein  contained,  hath  granted,  bargained,  sold,  aliened, 
assigned,  conveyed,  transferred  and  set  over,  and  by  these  presents  doth 
grant,  bargain,  sell,  alien,  assign,  convey,  transfer  and  set  over  unto  the 
said  Trustee,  its  successors  and  assigns; 

All  of  the  following  described  property  and  franchises  of  the  Com- 
pany, to  wit: 

{Specific  description  of  the  property  mortgaged.) 

To  Have  And  To  Hold  all  and  singular  the  said  property,  with  all 
real  estate,  buildings,  fixtures,  articles  and  property  of  every  kind,  be- 
longing to  or  pertaining  to  the  same  unto  the  said  Trustee,  its  successors 
and  assigns  forever; 

In  Trust,  Nevertheless,  for  the  equal  pro  rata  benefit  and  security 
of  any  and  all  persons  and  parties  who  may  be  or  become  the  owners  or 
lawful  holders  of  any  of  the  bonds  to  be  issued  hereunder  and  secured 


390  MISCELLANEOUS  EORMS. 

hereby,  irrespective  of  date  or  priority  of  issue,  without  any  discrimina- 
tion, preference  or  priority  of  any  one  bond  over  another  or  others,  by 
reason  of  priority  in  time  of  issue,  or  sale,  or  negotiation  thereof,  or 
otherwise,  and  to  secure  the  due  payment  of  each  of  the  said  bonds  to- 
gether with  the  interest  thereof,  and  for  the  uses  and  purposes  and  upon 
the  terms  and  conditions  hereinafter  declared  and  expressed;  and 

It  Is  Hereby  Expressly  Covenanted  And  Agreed  by  and  between  the 
parties  hereto  that  all  such  bonds  are  to  be  issued,  negotiated  and  received, 
and  that  the  said  property  and  franchises  mortgaged  are  to  be  held  by  the 
Trustee  upon  and  subject  to  the  following  further  trusts,  uses,  conditions 
and  covenants,  that  is  to  say: 

First. — The  bonds  to  be  issued  hereunder  shall  be  executed  on  behalf 
of  the  Compressor  Company  by  its  proper  officers  and  shall  be  delivered 
to  the  Trustee  for  certification,  and  said  Trustee  shall  certify  and  de- 
liver said  bonds  so  certified  upon  the  order  of  the  Board  of  Directors  of 
the  Compressor  Company.  An  order  purporting  to  be  the  order  for  de- 
livery of  said  bonds  and  believed  by  the  Trustee  to  be  genuine  shall  be 
conclusive  authority  and  full  protection  to  the  Trustee  for  the  certification 
and  delivery  of  the  bonds. 

Only  such  bonds  as  shall  bear  thereon  endorsed  the  Trustee's  certif- 
icate, duly  executed,  shall  be  secured  by  this  indenture,  or  entitled  to  any 
lien,  right,  or  benefit  thereunder,  and  such  certificate  of  the  Trustee  upon 
any  such  bond  executed  by  the  Compressor  Company  shall  be  conclusive 
evidence  that  the  bond  so  certified  has  been  duly  issued  thereunder,  and 
that  the  holder  is  entitled  to  the  benefit  of  the  trust  hereby  created. 

Before  certifying  or  delivering  any  bond,  all  coupons  thereon  then 
matured  shall  be  cut  oflf,  canceled  and  delivered  to  the  Compressor  Com- 
pany. 

Second. — All  bonds  secured  hereunder  may  be  registered  in  the  name 
of  the  holder,  when  so  requested  by  such  holder,  upon  bond  transfer  books 
which  the  Compressor  Company  shall  maintain  and  keep  for  such  purpose 
at  the  office  of  the  Trustee  in  the  City  of  New  York  as  long  as  any  of  the 
said  bonds  shall  remain  outstanding.  After  such  registration  such  bonds 
shall  be  transferable  only  upon  such  transfer  books,  by  the  registered 
owner  or  his  lawful  attorney,  and  any  such  transfer  shall  be  noted  on 
the  bonds  by  the  indorsement  of  the  Transfer  Agent  hereinafter  appointed. 
After  registration  of  any  bond,  the  principal  thereof  shall  be  payable  only 
to  the  registered  owner,  but  the  coupons  shall  be  payable  to  the  bearer 
upon  presentation  and  surrender  thereof,  and  shall  be  negotiable  by  de- 
livery as  if  such  bond  was  not  registered. 

Any  registered  bond  may  at  any  time  be  transferred  by  the  registered 
owner  thereof,  upon  said  transfer  books  to  bearer,  and  such  transfer  shall 
be  noted  upon  said  bond,  and  the  said  bond  shall  thereupon  be  negotiable 
by  delivery  as  if  it  had  never  been  registered,  and  each  of  said  bonds  shall 
continue  subject  to  successive  registrations  and  transfers  to  bearer  at  the 
option  of  the  holder  thereof. 

For  the  purpose  of  registering  and  transferring  said  bonds  as  above 
set  forth,  the  Securities  Trust  Company  of  the  City  of  New  York  is  hereby 
appointed  and  constituted  Transfer  Agent  of  the  said  Compressor  Com- 
pany. 

Third. — Until  default  shall  be  made  by  the  Compressor  Company,  its 
successors  or  assigns,  in  the  payment  of  the  principal  or  interest  of  the 
bonds  hereby  secured,  or  any  of  them,  or  in  the  performance  of  any  of 
the  covenants,  agreements  and  provisions  on  its  part  to  be  kept  and  per- 
formed, as  herein  set  forth,  the  Compressor  Company,  its  successors  and 
assigns  shall  be  permitted  to  possess,  manage,  use  and  occupy  the  premises 
affected  hereby,  with  all  their  appurtenances  and  belongings  in  all  re- 
spects as  fully  as  if  this  indenture  had  not  been  made. 


BOND   ISSUES.  391 

Fourth. — If  the  Compressor  Company  shall  well  and  truly  pay  to  the 
holders  thereof  the  principal  of  the  bonds  secured  hereunder  and  the  in- 
terest moneys  becoming  due  thereon  respectively  at  the  time  and  in  the 
manner  specified  in  the  said  bonds  and  coupons  thereto  annexed,  and  shall 
keep  and  perform  all  the  covenants,  agreements  and  stipulations  on  its  part 
in  said  bonds  or  in  this  agreement  contained,  then  these  presents  and  the 
trust  hereby  created  shall  cease  and  determine,  and  the  said  Trustee  shall 
in  such  event  release  and  discharge  this  mortgage  and  the  property  and 
premises  encumbered  thereby.  The  Trustee  may  also  execute  such  re- 
lease and  discharge  upon  production  by  the  Compressor  Company  or  its 
assigns  of  all  the  bonds  issued  hereunder,  together  with  the  coupons 
thereto  belonging,  canceled  or  for  cancellation,  and  the  Trustee  shall  not 
be  under  any  liability  or  obligation  to  inquire  into  the  holding  of  said 
bonds  by  the  Compressor  Company  or  its  assigns. 

Fifth. — The  said  Compressor  Company,  while  it  shall  be  in  possession 
of  the  mortgaged  premises,  and  while  there  shall  be  no  existing  default  in 
respect  of  the  payment  of  the  principal  or  interest  of  any  of  the  said  bonds 
of  the  Compressor  Company,  or  in  the  performance  of  any  of  the  covenants 
herein,  may.  with  the  consent  in  writing  of  the  Trustee,  sell  any  portion 
of  the  premises  heretofore  granted.  If,  in  the  opinion  of  the  Board  of 
Directors  of  the  Compressor  Company,  such  sale  or  change  shall  be  ex- 
pedient, said  opinion  shall  be  expressed  in  a  resolution  of  the  said  Board, 
and  the  Trustee  may  upon  delivery  to  it  of  a  copy  of  the  resolution  of 
the  Board  of  Directors  to  that  effect  release  from  the  lien  and  operation 
of  this  indenture  any  part  of  the  premises  hereby  mortgaged,  provided 
that  the  purchase  money  from  such  sale  or  sales  shall  be  paid  to  the  said 
Trustee  for  application  to  the  discharge  of  the  bonds  and  coupons  here- 
under issued,  as  set  forth  in  Section  Fifteenth,  or  to  be  set  aside  to  be 
applied  by  the  Compressor  Company  in  payment  for  other  real  or  personal 
property  or  in  betterments  of  or  additions  to  some  part  of  the  premises 
mortgaged  hereby,  and  until  so  applied  shall  be  held  by  the  Trustee.  Any 
new  property  so  acquired  by  the  Compressor  Company  shall  ipso  facto 
become  and  be  subject  to  the  lien  of  this  indenture  as  fully  as  if  specific- 
ally mortgaged  or  pledged  hereby,  but  if  requested  by  the  Trustee  the 
Compressor  Company  shall  execute  special  instruments  of  incumbrance 
upon  such  properties. 

Sixth. — The  Compressor  Company  covenants  and  agrees  that  it  shall 
and  will  promptly  pay  the  interest  and  the  principal  of  the  bonds  hereby 
secured,  at  the  time  and  in  the  manner  specified  in  said  bonds  and  the 
coupons  thereto  attached,  without  deduction  from  either  such  principal  or 
interest  for  or  on  account  of  any  United  States,  State,  municipal  or  other 
tax  or  taxes  which  the  Compressor  Company,  its  successors  or  assigns, 
may  be  required  to  pay  or  deduct  therefrom,  and  the  Compressor  Com- 
pany hereby  covenants  and  agrees  to  pay  all  such  tax  or  taxes. 

The  Compressor  Company  further  covenants  and  agrees  that  it  shall 
and  will,  from  time  to  time,  promptly  pay  and  discharge,  or  cause  to  be 
paid  and  discharged,  all  taxes,  rates,  levies  or  assessments  and  charges, 
ordinary  and  extraordinary,  levied  or  imposed  upon  the  premises  and 
properties  mortgaged  to  the  Trustee  to  secure  the  payment  of  the  bonds 
issued  hereunder,  whereby  the  lien  of  this  indenture  might  or  could  be 
be  held  prior  or  equal  to  the  lien  of  this  indenture,  so  that  the  same  shall 
not  fall  into  arrears  and  so  that  the  priority  of  this  indenture  given  to 
secure  said  bonds  shall  be  preserved. 

The  Compressor  Company  further  covenants  and  agrees  that  it  will 
not  create  nor  suffer  any  mechanic's,  laborer's  or  other  similar  liens  to 
be  created  upon  the  premises  and  property  mortgaged  to  secure  the  bonds 
issued  hereunder,  whereby  the  lien  of  this  indenture  might  or  could  be 


392  MISCElylyANEOUS  FORMS. 

impaired,  until  the  bonds  so  secured  hereunder,  with  all  the  interest  ac- 
crued thereon,  shall  have  been  fully  paid  and  satisfied. 

Seventh. — A  sinking  fund  shall  be  created  for  the  redemption  of  the 
bonds  issued  hereunder.  It  shall  consist  of  and  be  maintained  by  the 
payment  to  the  Trustee  by  the  Compressor  Company  on  the  first  day  of 
December,  1913,  and  on  each  succeeding  first  day  of  December  thereafter 
until  the  redemption  of  all  the  bonds  issued  hereunder,  of  twenty-five 
dollars  for  each  thousand  dollars  of  bonds  then  issued  and  outstanding, 
such  moneys  so  paid  to  be  used  in  the  purchase  of  outstanding  bonds  at 
the  lowest  price  at  which  they  may  be  had,  not  exceeding,  however,  one 
hundred  and  ten  per  centum  of  the  face  value  of  said  bonds,  plus  ac- 
crued interest,  and  if  bonds  cannot  be  so  purchased,  such  money  shall 
be  used  in  redemption  of  bonds  outstanding  as  provided  and  set  forth  in 
Section  Fifteenth  of  this  present  indenture. 

Eighth. — The  Compressor  Company  covenants  and  agrees  that  this 
deed  of  trust  delivered  to  the  Trustee  shall  be  a  first  mortgage  upon  the 
premises  and  property  affected  thereby,  that  the  same  shall  be  duly  ex- 
ecuted and  recorded  in  the  proper  office  of  registry  in  the  County  of  New 
York  where  the  said  premises  are  situated,  and  that  the  Compressor 
Company  will  execute  and  deliver  such  further  deeds,  transfers,  pledges 
and  assurances  as  the  Trustee,  under  the  advice  of  counsel  learned  in  the 
law,  shall  reasonably  require  for  the  better  accomplishing  of  the  pur- 
poses and  provisions  of  this  indenture. 

Ninth. — The  Compressor  Company  covenants  and  agrees  that  all 
buildings,  structures  and  machinery  situated  upon  the  properties  affected 
by  this  mortgage  given  to  secure  the  bonds  issued  hereunder,  shall  be 
kept  insured  during  the  entire  term  of  this  indenture  to  the  amount  of 
insurance  on  such  properties  usually  allowed  by  insurance  companies, 
against  loss  or  damage  by  fire,  and  against  loss  or  damage  from  boiler  ex- 
plosions, and  that  the  said  Compressor  Company  shall  and  will  pay  all 
premiums  upon  all  policies  for  such  insurance.  All  such  policies  shall  be 
made  payable  to  the  Trustee,  and  shall  be  deposited  with  it  for  the  benefit 
and  protection  of  the  bondholders  should  any  loss  occur  from  fire  or  boiler 
explosion  during  the  term  of  this  indenture.  Any  payments  of  insurance 
made  under  such  policies  may  be  applied  directly  by  the  Trustee  to  the 
repairing  or  replacement  of  the  property  damaged  or  destroyed,  or  it  may 
authorize  the  Compressor  Company  to  contract  for  such  repairs  or  replace- 
ments, and  pay  part  or  all  of  the  cost  thereof  from  said  insurance  moneys. 
The  Trustee  may  in  its  discretion  employ  such  insurance  moneys  in  the 
purchase  or  redemption  of  outstanding  bonds  as  set  forth  in  Section 
Fifteenth,  instead  of  expending  the  same  for  repairs  or  replacement  of 
property   damaged   or   destroyed. 

Tenth. — The  Compressor  Company  covenants  and  agrees  that  it  shall 
and  will  at  all  times  keep  the  buildings,  structures  and  appurtenances  there- 
to, or  any  replacement  or  replacements  thereof  in  good  order  and  repair, 
provided,  however,  that  in  the  event  of  total  destruction  of  any  building, 
the  Compressor  Company  may,  with  the  consent  of  the  Trustee,  add  to  the 
insurance  moneys  received  thereon  by  the  Trustee  sufficient  cash  pay- 
ments to  release  the  special  property  upon  which  such  building  was  sit- 
uated, under  the  terms  set  forth  in  Section  Fifth,  whereupon  the  Trus- 
tee shall  release  the  said  property  and  the  Compressor  Company  may  dis- 
pose of  the  same  at  its  discretion. 

Eleventh. — The  Compressor  Company  covenants  and  agrees  that  when 
and  as  the  coupons  attached  to  the  bonds  issued  hereunder  are  paid,  the 
coupons  shall  be  canceled,  and  that  no  purchase  or  sale  of  the  said 
coupons  or  advance  or  loan  upon  the  same,  made  on  behalf  of,  or  at  the 
request  of,  or  with  the  privity  of  the  said  Compressor  Company,  and  no 


BOND  ISSUES.  393 

redemption  of  the  said  coupons,  or  any  of  them,  by  any  guarantor  of  the 
payment  of  the  same,  shall  be  taken  or  operate  as  keeping  the  said 
coupons  alive  or  in  force  under  this  indenture  as  against  the  holders  of 
the  bonds  secured  hereunder  and  of  the  coupons  annexed  thereto. 

Twelfth. — In  case  default  shall  be  made  in  the  payment  of  interest  on 
any  of  the  bonds  issued  hereunder,  and  such  default  shall  continue  for  a 
period  of  six  months  after  demand,  or  in  case  default  shall  be  made  in  the 
performance  of  any  other  covenant  or  condition  hereby  required  to  be 
kept  or  performed  by  the  Compressor  Company,  and  if  the  same  shall 
continue  for  a  period  of  six  months  after  demand  made  for  such  per- 
formance, the  Trustee  may,  and,  upon  the  written  request  of  the  ma- 
jority in  amount  of  the  holders  of  the  bonds  then  outstanding,  shall  by 
written  notice  to  the  Compressor  Company,  declare  the  principal  of  all 
the  bonds  hereby  secured,  then  outstanding,  to  be,  and  the  same  shall 
thereupon  become  immediately  due  and  payable. 

Thirteenth. — In  case  default  shall  be  made  in  the  payments  of  the 
principal  or  interest  of  any  of  the  said  bonds  when  the  same  is  due  and 
payable  according  to  the  tenor  thereof,  or  if  default  shall  be  made  in  the 
performance  of  any  other  covenant  or  condition,  hereby  required  to  be 
kept  or  performed  by  the  Compressor  Company,  and  if  any  such  default  in 
payment  or  performance  shall  continue  for  a  period  of  six  months  after 
demand  by  the  Trustee,  then  and  in  every  such  case  the  Trustee,  or  its 
successors  in  the  Trust,  may  by  its  attorneys  and  agents  enter  into  and 
upon  all  and  singular  the  premises  hereby  conveyed,  and  each  and  every 
part  thereof,  and  operate  and  conduct  the  business  of  the  said  Com- 
pressor Company  in  all  respects  as  the  said  Compressor  Company  might 
do  in  possession  of  the  same ;  and  may  collect  and  receive  all  rents,  in- 
come, revenue  and  profit  to  be  derived  therefrom,  and  after  deducting  all 
proper  and  necessary  outlays  and  expenses  as  well  as  a  just  compensation 
for  its  own  services  and  for  the  services  of  such  attorneys,  agents  and 
assistants  as  it  may,  in  its  discretion,  employ  for  any  of  the  purposes 
aforesaid,  said  Trustee  shall  apply  the  rest  and  residue  of  the  moneys 
received  by  it  pro  rata  to  the  payment  of  the  interest  due  upon  such  of 
said  bonds  as  shall  then  be  outstanding.  In  any  such  case  if  payment  of 
all  interest  and  any  principal  due  shall  be  made  in  full  and  no  suit  to 
foreclose  this  mortgage  shall  have  been  begun  or  sale  made,  the  said 
Trustee  shall  restore  the  possession  of  the  premises  so  entered,  to  the 
Compressor  Company  without  prejudice  to  similar  entry  later  in  case  of 
similar  default. 

Fourteenth. — In  case  default  shall  be  made  in  the  payment  of  the  prin- 
cipal or  interest  of  the  said  bonds,  when  the  same  is  due  and  payable  ac- 
cording to  the  tenor  thereof,  or  if  default  shall  be  made  in  the  perform- 
ance of  any  other  covenant  or  condition  hereby  required  to  be  kept  or  per- 
formed by  the  Compressor  Company,  and  if  any  such  default  in  payment 
or  performance  shall  continue  for  the  period  of  six  months  after  demand, 
the  Trustee  may,  and  upon  written  request  of  the  holders  of  a  majority  in 
amount  of  the  registered  bonds  then  outstanding,  being  first  indemnified 
by  them  to  its  satisfaction,  shall  sell  or  foreclose  upon,  according  to  the 
proceedings  by  law  prescribed  in  this  state,  all  or  any  portion  of  the 
property  held  by  it  under  this  indenture,  and  such  proceedings  of  sale  or 
foreclosure  shall  be  a  perpetual  bar  both  at  law  and  in  equity  against  the 
Compressor  Company  and  against  all  persons  claiming  by,  from  or  under 
it.  After  deducting  from  the  proceeds  of  such  sale  or  foreclosure,  the 
proper  allowance  for  all  expenses  thereof,  including  attorney's  and  counsel 
fees,  and  all  other  expenses  or  advances  which  may  have  been  made  or 
incurred  by  said  Trustee  in  respect  of  the  said  property  or  the  appur- 
tenances thereto,  and  all  payments  which  may  have  been  made  by  it  for 


394  MISCELLANEOUS  FORMS. 

taxes  or  assessments,  or  in  satisfaction  of  charges  and  liens,  prior  to  the 
lien  of  the  mortgages  and  deeds  of  trust  to  the  Trustee  thereon,  or  for 
insurance,  as  well  as  reasonable  compensation  for  its  own  services,  the 
Trustee  shall  apply  the  proceeds  to  the  payments  of  such  bonds  and  the 
coupons  thereon  as  may  be  at  the  time  unpaid,  without  giving  preference 
of  priority  to  one  bond  over  another,  but  ratably  to  the  aggregate  amount 
of  such  unpaid  principal  and  accrued  and  unpaid  interest,  and  if  any  sur- 
plus remain  after  the  payment  in  full  of  the  principal  and  interest  of  said 
bonds,  then  the  Trustee  shall  transfer  and  pay  over  such  surplus  to  the 
Compressor  Company. 

Fifteenth. — It  is  covenanted  and  agreed  between  the  parties  hereto  and 
any  future  holders  of  the  bonds  that  the  said  bonds  are  redeemable,  at  the 
option  of  the  party  of  the  first  part,  on  any  interest  day  after  the  first  day 
of  December,  1913,  at  one  hundred  and  ten  per  cent,  of  their  face  plus 
accrued  interest,  provided  that  thirty  days'  notice  of  such  redemption  shall 
be  given  the  holders  thereof,  by  notice  published  once  a  week  for  four 
consecutive  weeks  prior  to  such  redemption,  in  a  newspaper  in  New 
York  City.  If  said  bonds  are  registered,  then  a  copy  of  the  said  notices 
shall  be  sent  to  the  post-office  address  of  the  parties  in  whose  names  said 
bonds  are  registered. 

Whenever  it  is  desired  to  redeem  any  of  said  bonds,  the  Board  of 
Directors  of  the  Compressor  Company  shall  pass  a  resolution  setting 
forth  the  amount  of  bonds  (at  their  par  value)  desired  to  be  redeemed. 
The  President  of  the  Compressor  Company  shall  thereupon  draw  by  lot 
the  numbers  of  the  bonds  to  be  redeemed,  and  he  shall  thereupon  certify 
that  such  bonds  were  drawn  for  redemption,  which  certificate  shall  be 
entered  upon  the  minutes  of  the  Compressor  Company,  and  a  duplicate 
copy  shall  be  delivered  to  the  Trustee.  Said  bonds  having  been  so  drawn 
for  redemption  shall  become  due  and  payable  on  the  succeeding  interest 
payment  date,  provided  that  the  date  of  first  publication  and  the  date  of 
mailing  notice  to  registered  holders  of  bonds  hereinbefore  provided  for 
shall  have  been  not  less  than  thirty  days  prior  to  such  interest  payment 
date,  and  the  said  bonds  shall  from  such  interest  payment  date,  cease  to 
draw  interest,  and  the  said  Compressor  Company  may,  upon  the  deposit 
of  the  proper  amount  with  the  Trustee,  be  privileged  to  consider  said 
bonds  as  paid  and  conceled. 

Sixteenth. — The  Trustee  may  resign  the  trust  hereby  created  upon 
giving  sixty  days'  notice  in  writing  to  the  Compressor  Company.  In  case 
of  the  resignation  of  the  Trustee,  or  of  its  dissolution  or  insolvency,  or 
removal  for  cause  as  Trustee  hereunder,  it  shall  be  the  duty  of  the  Com- 
pressor Company  to  call  a  meeting  of  the  bondholder?  by  printed  notice, 
published  in  two  of  the  public  newspapers  of  New  York  City,  once  a 
week  for  three  consecutive  weeks  next  preceding  such  meeting,  calling 
such  meeting  to  be  held  in  the  said  City  of  New  York,  and  by  mailing 
notice  of  the  same  to  each  of  the  registered  bondholders  not  less  than  ten 
days  before  the  date  of  such  meeting.  At  the  time  and  place  specified 
in  such  notice,  the  holders  of  said  bonds,  in  such  meeting  assembled,  shall 
organize  and  proceed  to  elect  a  suitable  corporation  to  act  as  Trustee  un- 
der this  agreement,  and  a  majority  in  amount  of  such  bonds  legally  rep- 
resented at  such  meeting  shall  be  competent  to  elect  such  new  Trustee, 
and  the  corporation  so  elected  shall  immediately  upon  election  and  on  its 
acceptance  in  writing  of  such  trust  become  vested  with  all  the  estate, 
trusts,  rights,  powers  and  duties  of  the  present  Trustee  herein,  and  shall 
be  entitled  to  receive  from  the  present  Trustee  or  its  legal  representa- 
tives all  moneys,  mortgages  and  assurances  appertaining  or  relating  to  this 
trust  and  the  due  execution  thereof. 

Seventeenth. — It  is  covenanted  and  agreed  by  the  parties  hereto,  and 


BOND   ISSUES.  395 

all  the  holders  of  bonds  hereunder,  as  conditions  precedent  to  the  accept- 
ance of  the  said  trust  by  the  said  Trustee,  or  any  successor  thereto,  as 
follows : 

The  Trustee  shall  not  be  answerable  for  any  act,  default,  neglect  or 
misconduct  of  any  of  its  agents  or  employees,  by  it  appointed  or  employed, 
in  connection  with  the  execution  of  any  of  the  said  trusts,  nor  in  any 
other  manner  answerable  or  accountable,  under  any  circumstances  what- 
soever, except  for  bad  faith.  The  recitals  contained  herein,  or  in  the 
bonds,  as  to  priority  of  lien,  or  any  other  matter  whatsoever,  are  made  by 
and  on  the  part  of  the  Compressor  Company,  and  the  Trustee  assumes 
no  responsibility  for  the  correctness  of  the  same.  It  shall  not  be  the  duty 
of  the  Trustee  to  file  or  record  at  any  time  this  deed  of  trust  or  any  other 
mortgages  or  deeds  of  trust  that  may  be  required  hereunder,  nor  to  do 
any  other  act  or  acts  suitable  and  proper  to  be  done  for  the  creation  or 
continuance  of  the  lien  or  liens  thereby  intended,  nor  to  effect  insurance 
against  fire  or  explosion,  nor  to  renew  any  policies  of  insurance,  nor  to 
keep  itself  informed  as  to  the  payment  of  any  taxes  or  assessments,  nor 
to  require  such  payments  to  be  made.  The  Trustee  may,  however,  in  its 
discretion,  do  any  or  all  of  these  things.  Neither  shall  the  Trustee  be 
held  responsible  for  the  nature  or  amount  of  the  security  mortgaged  to  it 
hereunder.  The  Trustee  shall  not  be  compelled  to  take  any  action,  as 
Trustee,  under  this  mortgage,  unless  properly  requested  and  in  every 
respect  indemnified  to  its  full  satisfaction.  The  Trustee  shall  be  entitled 
to  reasonable  compensation  for  all  services  rendered  hereunder  or  in  con- 
nection with  the  trust.  This  compensation,  together  with  any  and  all  nec- 
essary and  reasonable  expenses,  charges,  counsel  fees  and  other  disburse- 
ments incurred  by  the  Trustee  in  the  discharge  of  its  duties,  as  such,  shall 
be  paid  by  the  Compressor  Company,  or  out  of  the  trust  estate  upon  which 
they  are  hereby  made  a  lien,  prior  to  that  of  the  bonds  issued  hereunder. 
The  Trustee  shall  be  protected  in  acting  upon  any  notice,  consent,  request, 
certificate,  bond  or  other  paper  or  document  believed  by  it  to  be  genuine 
and  signed  by  the  proper  party.  The  Trustee  shall  be  held  responsible  for 
the  due  authentication  by  certificate  of  the  bonds  issued  hereunder,  and 
for  the  custody  and  disposition,  as  herein  provided,  of  the  securities  and 
moneys  received  by  it  hereunder. 

Eighteenth. — It  is  covenanted  and  agreed  between  the  parties  hereto 
that  the  words  "Compressor  Company"  when  used  in  these  presents  mean 
the  party  issuing  the  bonds  herein  referred  to;  that  the  word  "Trustee" 
means  the  corporation  charged  with  the  execution  of  the  trust  herein, 
whether  the  same  be  the  Securities  Trust  Company  of  the  City  of  New 
York,  or  any  successor  or  successors  in  the  trust  hereby  created ;  that  the 
word  "bonds"  means  the  bonds  issued  hereunder;  and  the  words  "Trus- 
tee," "bond,"  "bondholder"  and  "holder"  shall  include  the  plural  as  well 
as  the  singular  number  and  the  term  "majority"  shall  signify  the  majority 
in  amount. 

Nineteenth.— It  is  covenanted  and  agreed  that  this  indenture  may  be 
executed  in  several  counterparts,  each  of  which  so  executed  shall  be 
deemed  to  be  an  original,  and  such  counterparts  shall  together  constitute 
but  one  and  the  same  instrument. 

In  Witness  Whereof,  the  Maxwell  Compressor  Company 
has  caused  its  corporate  name  to  be  hereunto  subscribed 
by  its  President  and  its  corporate  seal  to  be  affixed  and 
attested  by  its  Secretary,  and  the  Securities  Trust  Com- 
pany OF  THE  City  of  New  York,  in  token  of  its  accept- 
ance of  the  trust  hereby  created,  has  caused  its  corporate 
name  and  seal  to  be  hereunto  affixed  by  its  President,  and 


396  MISCELI^ANEOUS  FORMS. 

attested  by  its  Secretary,  on  this  twelfth  day  of  Novem- 
ber, one  thousand  nine  hundred  and  eight. 

Maxwell  Compressor  Company, 
r  CORPORATE  1  By  Howard  M.  Maxwell, 

I      SEAL.      J  President. 

Attest  : 

Frank  Paulson, 

Secretary. 

Securities  Trust  Company  of  the  City  of  New  York, 

As  Trustee. 
/corporate"!  By  Malcolm  McDougald, 

\      seal.     J  President. 

Attest  : 

Frank  G.  Cooper, 

Secretary. 
(Notarial  acknowledgment  by  president  of  each  corporation  as  given 
in  Form  178.) 

It  will  be  understood  that  the  preceding  form  has,  on 
account  of  space  limits,  been  reduced  to  its  simplest  terms. 
It  is,  however,  a  good  working  model  and  will  afford  an 
excellent  basis  upon  which  to  build  up  a  more  elaborate  in- 
strument when  required. 


GENERAL    INDEX, 

[References  are  to  pages.] 
(For  List  of  Forms,  see  Table  of  Contents.) 


Acceptance  of  Official  Position,  170,  181. 
of  Resignation,  152,  153,  182,  333-335. 
of  Subscriptions,  48-50,  94,  95. 
Accounts,  Books  of,  96,  99-101,  189,  190,  193-195. 
Acknowledgment,  Corporate,  352,  359. 

Forms,  359. 
Adjourned  Meeting  of  Directors,  170. 
Forms,  316. 
of  Stockholders,  134,  142,  314. 
Forms,  313,  314. 
Adjournment,  122,  133,  134,  141,  142,  170. 
Administrators,  Transfers  to  and  by,  84-86,  92,  93. 

Voting  by,  97. 
Adoption  of  By-Laws,  22,  29,  32-35,  103,  104,  156,  157. 

Forms,  262. 
Advantages  of  Corporate  Form,  23,  24. 
Affidavit,  Secretary's,  126,  139,  352,  353,  357. 
Forms,  353,  357. 
Treasurer's,  358,  359. 
Forms,  358,  359. 
Agent,  Transfer,  68-70. 
Agents,  Appointment  of,  29,  156,  175,  176,  191-193. 

Transfers  to  and  by,  81,  83,  84,  91-93. 
Agreements.     (See  Contracts.) 

Amendment  of  By-laws,  27,  32,  36-38,  41,  103,  104,  197. 
Forms,  294,  297. 
of  Charter,  25-27,103. 
of  Minutes,  126,  127,  202. 
Annual  Meetings  of  Stockholders.     (See  Meetings.) 

Reports,  127,  128,  184,  190,  318-323.    (See  also  Reports.) 
Forms,  294,  319-323. 

397 


398  GEJNERAL  INDEX. 

[References  are  to  pages.] 

Appointment  of  Committees,  156,  172,  173,  188-194. 

of  Officers  and  Agents,  29,  156,  175,  176,  191-193.     (See  also  Elec- 
tion.) 
Approval  op  Minutes,  126,  127,  141,  168,  201,  202. 
Articles  op  Association,  25.     (See  Charter.) 
Assessments,  45,  114,  115. 

Liability  for,  45,  79,  80,  114,  115. 
Notice  of,  324-326. 

Forms,  324-326. 
Assets,  Distribution  of,  96,  99. 

Sale  of  Entire,  104,  105,  154,  213. 
Forms,  296,  309. 
Assignment  of  Contract,  366,  367. 
Forms,  366,  367. 
of  Bonds,  385,  386. 
of  Instalment  Scrip,  231,  232. 

Forms,  231,  232. 
of  Patent,  367,  368. 

Forms,  368. 
of  Property  for  Stock,  254-256. 

Forms,  254,  255. 
of  Stock.     (See  Transfer  of  Stock.) 
of  Stock  Certificate.     (See  Certificate  of  Stock.) 
of  Subscriptions,  231,  232. 
Forms,  231,  232. 
Attestation  of  Seal,  339. 

Forms,  340. 
Attorney,  Powers  of,  78,  83,  84,  91,  92,  123. 
Forms,  360-364. 
Transfers  to  and  by,  78,  81,  83,  84,  92,  93. 
Auditor,  193,  194. 

B 

Ballot,  Voting  by,  97,  128,  129,  169,  309,  310. 

Forms,  310. 
Bank,  Designation  of,  189,  191,  297-299,  354,  355. 

Forms,  297-299,  354,  355. 
Bill  of  Sale,  365. 

Forms,  365. 
Board  of  Directors.     (See  Directors.) 
Bond  of  Indemnity,  Lost  Certificate,  70-72,  379,  380. 

Forms,  380. 
of  Treasurer,  190,  191,  378,  379. 

Forms,  378,  379. 


generai.  index.  399 

[References  are  to  pages.] 

Bond  Register,  204. 
Bonds,  Issuance  of,  154,  384-396. 
Forms,  386-396. 

Coupon,  384-386. 

Deed  of  Trust,  388-396. 

Registered,  385. 
Trustee's  Certificate,  387,  388. 
Books,  Corporate,  52-60,  195-204,  369-377. 
Bond  Register,  204. 

Closing  Books,  53,  59,  60,  117,  119,  208. 
Coupon  Register,  204. 
Custody  of,  55,  187,  188,  195,  196. 
Dividend  Book,  204,  377. 

Forms,  377. 
Inspection  of,  57,  96,  99-101,  180,  186-188,  191,  196. 
Instalment  Book,  203,  204,  376,  377. 

Forms,  376. 
Instalment  Certificate  Book,  203,  226,  228. 

Forms,  227-229. 
Minute  Book,  195-198,  311.     (See  also  Minutes.) 
of  Account,  189,  193-195. 

Secretary's  Books,  52-60,  186-188,  195-198,  203. 
Stock  Book  and  Stock  Ledger,  56-57,  66,  dl ,  130,  371-376. 

Forms,  172,  374,  375. 
Stock  Certificate  Book,  53-56,  58,  64,  68,  69,  130. 

Forms,  235-238. 
Subscription  Book,  203,  219. 
Surrender  of,  188,  190,  191. 
Transfer  Book,  53,  57-60,  66,  67,  117,  119,  130,  208,  369-371.     (See  also 

Forms,  369-371.  Transfer  Book.) 

Transfer  on,  52,  53,  57-59,  61-70. 
Treasurer's  Books,  189-191,  195,  203,  204. 
Business  Corporations,  20,  25. 
of  Meetings, 

Order  of,  119,  133,  167. 

Special  Meetings,  136-142,  162-166. 

By-Laws,  21,  22,  31-41,  116,  131,  156,  157,  245-249. 

Forms,  246-249. 
Adoption  of,  22,  29,  32-35,  103,  104,  156,  157. 
Amendment  and  Repeal  of,  27,  32,  36-38,  41,  103,  104,  197. 

Forms,  294,  297. 
Arrangement  of,  35. 
Certification  of,  41,  249. 

Forms,  249. 


400  GENERAL  INDEX. 

[References  are  to  pages.] 

By-Laws — Continued. 

Certified  Extracts  from,  89,  356. 

Forms,  356. 
Contract  Obligation  of,  32,  37,  38. 
Directors',  22,  33,  34,  104,  156,  157. 
Enforcement  of,  39-41. 
Illegal,  31,  32. 
Observance  of,  32,  38-41. 
Power  to  Make,  22,  33,  34,  156,  157. 
Provisions  of,  35,  36,  37,  96,  101,  102. 
Record  of  in  Minute  Book,  41,  197,  245. 
Relative  Authority  of,  21. 
Violations  of,  38-41. 


Cai,endar,  Corporate,  117,  188,  381-383. 

Forms,  382,  383. 
Called  Meeting.     (See  Meetings,  Special.) 

Calls  and  Waivers  of  Meetings,  138,  140,  141,  163,  165,  257-259,  267,  273- 
Forms,  258,  259,  268,  273-275.  [275. 

Calls  eor  Assessments.     (See  Assessments.) 

Calls  for  Special  Meetings,  136-138,  140,  141,  163-165,  267-273,  275.    (See 
Forms,  269-273,  275,  300,  301.  [also  Notice.) 

Cancellation  of  Stock  Certificates,  54,  55,  240. 
Capital,  Corporate,  20,  21,  24,  42,  107,  115,  205,  207,  208. 
Capital  Stock.    (See  Stock.) 
Certificate  of  Incorporation,  25.    (See  Charter.) 
Certificate,  Inspectors  of  Election,  128,  307-309. 
Forms,  307-309. 
Instalment,  226,  228,  231,  237. 

Forms,  228,  229,  231,  232. 
Secretary's,  125,  126,  140,  197,  299,  352-357. 
Forms,  352-357. 
Certificates  of  Stock,  24,  49,  50,  52,  54,  55,  61-93,  130,  233-240. 
Forms  235,  237,  238. 
Assignment  of,  50-52,  58,  59,  61-68,  82-84,  86,  90-93,  239,  240.     (See 
Forms,  239,  240.  [also  Transfer  of  Stock.) 

In  Blank,  59,  61-63,  65,  71,  72, 11,  84,  90,  239. 

Forms  239. 
Book  of,  53-56,  58,  64,  68,  69,  130. 
Cancellation  of,  54,  55,  240. 
Common  Stock,  236,  237. 

Forms,  235. 
Delivery  of,  64,  65,  72. 


GENERAL  INDEX.  401 

[References  are   to   pages.] 


Certificates  of  Stock — Continued. 
Issue  of,  49-55,  373,  374. 

Fee  for,  50,  55. 
Lost  or  Destroyed,  66,  70-72,  11,  78,  93,  130. 
Partly  Paid,  50,  228. 

Forms,  228,  229. 
Preferred  Stock,  236-239. 

Forms,  237,  238. 
Preparation  of,  233,  234. 
Receipts  for,  54,  64,  84,  236,  240. 

Forms,  240. 
Signatures  to,  186,  187,  234,  236. 
Stockholders  Entitled  to,  49,  50,  70,  95. 
Stub,  54,  55,  236-238. 

Forms,  235,  236. 
Surrender  of,  50,  54,  55,  58,  61-66,  72,  240. 
Temporary,  54,  229,  230. 
Forms  229,  230. 
Certifications,  41,  89,  125,  126,  140,  197,  249,  299,  352-359. 

Forms  249,  352-359. 
Chairman  of  Board,  166,  183,  191,  192. 

of  Meetings,  120,  121,  166. 
Change  of  Number  of  Directors,  144,  145. 
Charter,  21,  22,  25-31,  101,  103,  197,  241-244. 

Forms,  242-244. 
Checks,  Corporate,  342-346. 
Forms,  342-346. 
Dividend,  208,  209,  345,  347. 
Forms,  328,  345. 
Classification  of  Corporations,  20. 
of  Directors,  150. 
of  Stock,  45,  131. 
Closing  Books,  53,  59,  60,  117,  119,  208. 
Collateral  Security,  Stock  as,  24,  72-75 
Combination  of  Corporations,  215. 
Commission  on  Sale  of  Stock,  110. 
Committee,  Auditing,  194. 

Report  of,  127,  128,  168,  169,  322,  323. 
Forms,  322,  323. 
Committees,  Standing,  156,  171-174,  198. 
Common  Stock,  45,  46,  236,  237.    (See  also  Stock.) 

Forms,  235. 
Company,  21. 

Joint  Stock,  19,  20. 


402  G^NERAI,  INDKX. 

•  [References  are  to  pages.] 

Compensation  of  Directors,  147,  148,  177. 

Officers,  148,  157,  177,  193. 
Consent  Meetings,  139,  140,  163,  165,  166,  274. 

Forms,  274,  275. 
^Consolidation,  105,  211-214,  314. 

Forms,  296,  297,  312-314. 
Contracts,  23,  30,  32,  158,  159,  168,  364-367. 

Forms,  364-367. 
Between  Directors  and  Corporation,  158,  159,  168. 
By-laws  as,  32,  37,  38. 
Ultra  Vires,  30,  159. 
Corporate  Acknowledgment,  352,  359. 

Forms,  359. 
Calendar,  117,  188,  381-383. 

Forms,  382,  383. 
Proxies,  289-291. 

Forms,  289-291. 
Seal,  28,  187,  339,  342.  (See  also  Seal.) 
Signature,  337-341,  348. 

Forms,  338-341. 
System,  19-41. 
Corporations,  19-24. 

Advantages  of,  23,  24. 

As  Stockholders,  88-90,  97,  130,  146,  218. 

Books  of.     (See  Books.) 

Business,  20,  25. 

Consolidation  of,  105,  211-214,  215,  314.    (See  also  Consolidation.) 

Forms,  296,  297,  312-314. 
Creditors  of,  30,  79,  80,  107-115,  215-217. 
De  Facto,  112,  113. 
Directors  Dealing  with,  158,  159,  168. 
Directors  of.     (See  Directors.) 
Dissolution  of,  29,  96,  99,  105,  216,  217. 
Domestic,  21,  57. 
Duration  of,  24. 
Financial,  20,  21,  25. 
Foreign,  21,  57,  113,  114. 
Holding  Stock,  88-90,  97,  130,  146,  214,  218. 
Legal  Entity,  23,  24. 
Liability  of,  30,  32,  55,  77,  81,  84. 
Membership,  20,  81. 
Organization  of,  20-23. 
Powers  of,  21,  28-30. 
Public  Utilities,  20,  21,  25. 


GENERAL  INDEX.  403 

[References  are  to  pages.] 


Corporations — Continued. 

Records  of.     (See  Books;  Minutes.) 

Regulation  of,  21,  22. 

Reorganization  of,  215,  216. 

Stock,  19-21. 

Stock  of.    (See  Stock.) 

Stockholders  of.     (See  Stockholders.) 

Suits  by,  23,  28. 

Transfers  to  and  by,  81,  88-90,  93. 

Ultra  Vires  Acts,  30. 

Voting  by,  89,  97,  130,  289-291. 
Counsel,  193. 
Coupon,  384-386. 

Forms,  387. 
Coupon  Bond,  384-387. 

Forms,  386,  387. 

Register,  204. 
Creditors,  Corporate,  30,  79,  80,  107-115,  215-217. 
Cumulative  Dividends,  46. 

Voting,  32,  131-133. 


Declaration  oe  Dividends,  159,  205,  206.     (See  also  Dividends,) 
Deed  oe  Trust,  388-3%. 

Forms,  388-396. 
De  Facto  Corporations,  112,  113. 
De  Facto  and  De  Jure  Officers,  152,  176,  180,  181. 
Delinquent  Subscriptions,  107-110,  325,  326. 

Forms,  326. 
Deposits,  Bank,  191,  297-299. 

Forms,  297-299. 
Directors,  22,  23,  143-174. 

Acceptance  of  Office,  331. 

Act  as  Trustees,  155,  156,  158-160. 

Action  without  Meeting,  143,  144. 

By-laws  of,  22,  23,  34,  104,  156,  157. 

Chairman  of  Board,  166,  183,  191,  192. 

Classification  of,  150. 

Compensation  of,  147,  148,  177. 

Contracts  with  Corporation,  158,   159,   168. 

Declaration  of  Dividends  by,  159,  205,  206.     (See  also  Dividends.) 

De  Facto  and  De  Jure,  152. 

Dissent  from  Illegal  Action,  160,  199,  200. 

Dummy,  146,  147,  214. 


404  GEnKRAIv  index. 

[References  are  to  pages.] 

Directors — Continued. 

Duties  of,  155,  156. 

Election  of,  22,  29,  59,  60,  97,  103,  104,  128-133,  149-152.     (See  also 

Forms,  307-310,  331.  [Meetings.) 

Failure  to  Elect,  128,  149,  l5l,  152. 
First,  147,  149. 
Function  of,  143,  154,  155. 
Holding  Over,  128,  149,  151,  152. 
Liabilities  of,  30,  38-40,  159,  160. 
Managing  Director,  192. 

Meetings,  161-170.     (See  also  Meetings,  Minutes,  Voting.) 
Method  of  Action,  143,  144,  155,  158. 
Number  of,  23,  26,  144,  145. 
Office-Holding  by,  155,  157,  177. 
Powers  of,  22,  23,  105,  143,  154-159,  171,  172,  175,  176,  178,  179,  181, 

182,  193. 
Qualifications,  89,  145-147. 
Ratification  by,  144,  162,  179,  302. 
Repeal  of  By-laws  by,  37. 
Removal  of,  106,  153. 
Resignations  of,  152,  153,  333-536. 

Forms,  333-335. 
Standing  Committees,  156,  171-174.     (See  also  Committees,  Stand- 
ing.) 
Term  of  Office,  149-152. 
Vacancies  Among,  104,  150,  151. 
Voting,  167,  168. 
Dissolution  of  Corporation,  29,  96,  99,  105,  216,  217. 
Dividend  Book,  204,  ZIT. 

Forms,  377. 
Checks,  208,  209,  345,  347. 

Forms,  328,  345. 
Dividends,  45,  46,  60,  63,  74,  95,  96,  98,  115,  159,  205-210. 

Cumulative,  46.  '    . 

Declaration  of,  159,  205,  206. 
Forms,  299,  300. 

Discretionary  with  Directors,  205. 
Form  of,  207,  208. 
Illegal,  115,  159,  205,  210. 
Impairing?  Capital,  205,  207,  208. 
Mailing  Order  for,  329,  330. 

Forms,   330. 
Notice  of,  60,  208,  327-330. 

Forms,  327-330. 
on  Pledged  Stock,  74,  209,  219. 


GENERAL  INDEX,  405 

[References  are  to  pages.] 

Dividends — Continued. 

Preferred,  45,  46,  98. 
Resolution  for,  59,  206,  210. 

Forms,  299,  300. 
Right  to,  45,  46,  63,  74,  95,  96,  98,  206. 
Domestic  Corporations,  21,  113,  114. 
Draft,  Corporate,  346. 

Forms,  346. 
Dummy  Directors,  146,  147. 

Stockholders,  81,  82. 
Duration  of  Corporation,  24. 
Duties  of  Directors,  155,  156. 

of  Officers,   77,  78,   102,   177-179.      (See  also   President,   Secretary, 
etc.) 

E 

Election  of  Directors,  22,  29,  59,  60,  97,  103,  104,  128-133,  149-152,  382. 
(See  also  Meetings  of  Stockholders,  Annual.) 
Inspectors  of  Election,  128,  130,  306-309. 

Forms,  307-309. 
Proxies  for,  73,  97,  123,  124,  282-292. 

Forms,  284-292. 
Quorum  at,  122-125. 
Voting  at,  97,  128-132,  309,  310. 
Forms,  310. 
E1.ECT10N  OF  Officers,  23,  29,  156,  159,  170,  175,  176,  181,  182. 

Forms,  300,  355,  356. 
Employees,  Appointment  of,  176,  192,  193. 

Forms,  295,  332. 
Endorsement  of  Certificate  of  Stock,  63,  72,  82-84,  90.     (See  also  Certif- 

ficates  of  Stock,  Assignment  of.) 
of  Checks,  345,  346. 

Forms,  345,  346. 
Evidence,  Minutes  as,  135,  196,  198,  200. 
Examination  of  Accounts,  96,  99-101,  190. 

of  Books,  57,  96,  99-101,  180,  186-188,  191,  196. 
Exchange  of  Property  for  Stock,  109,  250-256,  261. 
Forms,  251-256,  258-260,  263. 
Assignment  of  Property,  254-256. 

Forms,  254,  255. 
Directors'  Action,  250,  253,  261. 

Forms,  253,  254. 
Stockholders'  Action,  250,  253,  261. 
Forms,  253. 


406  GENERAL  INDEX. 

[References  are  to  pages.] 

Execution  of  Corporate  Instruments,  337-341. 

Forms,  338-341. 
Executive  Committee,  171,  172.     (See  also  Committees,  Standing.) 

Officers,  157,  183.     (See  also  President,  Secretary,  etc.) 
Executors,  Transfers  to  and  by,  81-86,  92,  93. 

Voting  by,  97. 

EXEMPEIEICATION   OF    MiNUTES,    358. 

Forms,  358. 
ExpuESioN  OF  Stockholders,  41. 

F 

Face  Vaeue  of  Stock,  43. 

Fees,  Directors',  147. 

Finance  Committee,  172,  173.     (See  also  Committees,  Standing.)  ■ 

Financial  Corporations,  20,  21,  25. 

First  Meetings,  34,  257-266.     (See  also  Meetings.) 

Forms,  258-260,  262-266. 
Foreign  Corporations,  21,  57,  113,  114. 
Forfeiture  of  Stock,  108,  115. 

Forms,  326. 
Forged  Transfers,  11,  78. 

Full-Paid  Stock,  23,  44,  45,  48-51,  61,  62,  75,  79,  80,  107-112,  114,  115. 
Liability  in  Transfer  of,  79-82. 

G 

General  Manager,  192,  193. 

Notice  of  Election  as,  332. 
Forms,  332. 
Guaranteed  Stock,  46.     (See  also  Preferred  Stock.) 
Guardians,  Transfers  to  and  by,  81-83,  87,  88,  92. 

H 

Holding  Corporations,  88-90,  97,  146,  214,  218. 
Holding  Over,  Directors,  128,  149,  151,  152. 
Officers,  170,  176. 


Illegal  Acts  of  Officers  and  Directors,  158-160,  180,  210. 

By-laws,  31,  32. 

Contracts,  30,  158. 

Dividends,  115,  159,  205,  210. 
Incorporation,  Advantages  of,  23,  24. 

Certificate   of.     (See   Charter.) 

Defective,  112,  113. 


GENERAL  INDEX.  407 

[References  are  to  pages.] 

Incorporators,  42,  94,  149,  250,  251,  253,  266. 
Increase  of  Capital  Stock,  96,  98,  99. 
Indemnity  Bonds,  70-72,  190,  191,  378-380. 

Forms,  378-380. 
Inspection  of  Accounts,  96,  99-101,  190. 

of  Books,  57,  96,  99-101,  180,  186-188,  191,  196. 
Inspectors  of  Election,  128,  130,  306-309. 

Forms,  307-309. 
Instalment  Book,  203,  204,  376,  Zll. 
Forms,  376. 
Payments,  224-229. 

Forms,  224,  225,  227-229,  324. 
Scrip  or  Certificate,  50,  203,  226,  228. 
Forms,  227-229. 
Assignment  of,  231,  232. 
Forms,  231,  232. 
Interim  Receipts,  50,  54,  229. 

Forms,  229. 
Issuance  of  Stock  for  Property.     (See  Exchange  of  Property  for  Stock.) 
Issue  of  Bonds,  154,  384-396. 
Forms,  386-396. 
of  Stock,  47,  49-52,  54,  55,  186,  256.     (See  also  Transfer  of  Stock.) 
Issued  Stock,  44,  47. 


Joint-Stock  Companies,  19.  20. 


Lease  of  Entire  Property,  213,  214. 
Ledger,  Stock,  56,  57,  66,  67,  371-376. 

Forms,  372,  374,  375. 
Liabilities  of  Agents,  Attorneys,  Trustees,  etc.,  as  Stockholders,  81. 
of  Corporations,  30,  32,  55,  11,  81,  84,  86,  87. 
of  Directors,  30,  38-40,  159,  160. 
of  Officers,  30,  38-40,  85,  179,  180,  188,  210,  217. 
of  Stockholders,  23,  44,  45,  49,  79-85,  107-115. 

as  Partners,  112-114. 

for  Assessments,  45,  79,  80,  114,  115. 

for  Illegal  Dividends,  115,  205. 

of  Foreign  Corporations,  113,  114. 

on  Full-Paid  Stock,  114,  115. 

on  Partly  Paid  Stock,  23,  44,  45,  48,  79-82,  107-112. 

on  Pledged  Stock,  73,  82. 

on  Preferred  Stock,  112. 


408  GENERAL  INDEX. 

[References  are  to   pages.] 

lyiABiuTiEs — Continued. 

of  Stockholders — Continued. 

to  Corporate  Creditors,  79,  80,  107-115. 
to  Corporation,  79,  80,  107-112,  114,  115. 
under  Defective  Incorporation,  112-113. 
of  Subscribers,  23,  48,  107-110. 
of  Transferee  of  Stock,  79-85,  110-112. 
of  Transferrer  of  Stock,  79-85,  87,  110,  111. 
List  of  Stockholders,  119-121,  140,  186,  198,  304,  305. 

Forms,  304. 
Lists,  Subscription,  218-224. 
Forms,  219-224. 
Loose-Leaf  Minute  Book,  196,  197. 
Lost  Certificate,  66,  70-72,  11,  78,  93,  130. 
Indemnity  Bond  for,  70-72,  379,  380. 

Forms,  380. 
Procedure  for  Reissue,  66,  70,  71. 

M 

Manager,  192,  193. 

Notice  of  Election  as,  332. 
Forms,  332. 
Managing  Director,  192,  300. 
Married  Woman  as  Stockholder,  80,  82,  83,  92. 
Meetings  of  Directors,  143,  144,  161-170. 
Adjourned,  170. 

Forms,  316. 
Call  and  Waiver,  163,  165,  257,  259,  268,  273-275. 

Forms,  259,  273-275. 
Call  for,  163-165,  267,  275. 

Forms,  275. 
Committee  Meetings,  173,  174. 
Consent  Meetings,  163,  165,  166,  274. 

Forms,  274,  275. 
Election  of  Officers,  156,  169,  170,  175,  176,  181,  182. 

Forms,  300,  355,  356. 
First,  34,  257,  259,  261.  264-266. 
Forms,  259,  264-266. 
Calls  and  Waivers,  259,  268,  275. 
Forms,  259. 
Minutes,  168,  197-202,  264-266,  311,  314. 

Forms,  264-266,  314-317. 
Notice  of,  162-167,  170,  267,  275,  276,  281,  382. 

Forms,  281. 
Officers  of,  166,  170. 


GENERiM.  inde;x.  409 

[References  are   to   pages.] 

Mbbtings  of  Directors — Continued. 
Procedure  at,  166-t70,  261. 
Purposes,  162-166. 
Quorum,  151,  166-168. 
Regular,  161,  162,  165-169,  314-316. 

Forms,  314-316. 
Reports,  168,  169,  198. 
Special,  161-169,  273-275,  281,  316,  317. 

Forms,  273-275,  281,  316,  317. 
Time  and  Place  of,  161,  162,  164. 
Voting  at,  167,  168. 
Meetings  of  Stockholders,  116-142. 
Adjourned,  134,  142,  314. 

Forms,  313,  314. 
Annual,  116-135,  149. 

Adjournment  of,  122,  133,  134. 

Closing  Transfer  Book,  53,  59,  60,  117,  119. 

Election  of  Directors.  97,  102,  104,  128-133,  149-152. 

Forms,  310,  332. 
Inspectors  of  Election,  128,  130,  306-309. 

Forms,  307-309. 
Irregularities  in  Procedure,  117,  149,  150. 
List  of  Stockholders,  119-121,  186,  304,  305. 

Forms,  304. 
Minutes,  126,  127,  168,  197-203,  311,  312. 

Forms,  311,  312. 
Notice  of,  38,  60,  117-119,  125,  126,  276,  278-280. 

Forms,  278-280,  352,  353. 
Officers  of,  120,  121. 
Order  of  Business,  119,  133. 
Outline  Minutes,  120,  305,  306. 

Forms,  305,  306. 
Place  of,  116. 
Proxies,  73,  95,  97,  122-124,  282-292. 

Forms,  284-292. 
Quorum,  37,  122-125. 
Reports,  127,  128,  198,  318-323. 

Forms,  294,  319-323. 
Roll  Call,  121-123. 
Forms,  304. 
Voting  at,  46,  IZ,  74,  96,  97,  128-133,  309,  310. 
Forms,  310. 
First,  34,  149,  257-264. 

Forms,  258-260,  262-263. 
Calls  and  Waivers,  257-259,  268. 
Forms,  258. 


410  GElNERAI,  INDEX. 

[References  are  to  pages.] 

Meetings  of  Stockholders — Continued. 
First — Continued. 

Minutes,  260-264. 

Forms,  262,  263. 
Place,  257,  260. 
Proxies,  259,  260. 

Forms,  259,  260. 
Special,  136-142. 

Adjournment  of,  141,  142. 

Business  of,  136-142. 

Call  and  Waiver,  138,  140,  141,  267,  268. 

Forms,  268. 
Call  for,  136-138,  140,  141,  267-273. 

Forms,  269-273,  300,  301. 
Consent  Meetings,  139,  140. 
Minutes,  141,  168,  197-203. 

Forms,  312-314. 
Notice  of,  38,  136-142,  276,  277,  278. 

Forms,  276-278. 
Place  of,  116,  136,  137. 
Proof  of  Notice,  140,  141,  352,  353. 

Forms,  352,  353. 
Quorum,  Z7,  122-125. 
Time,  137. 
Membership  Corporations,  20,  81. 
Minority  Stockholders,  31,  32,  131-133. 

Freezing  out,  216. 
Minors  as  Stockholders,  80,  87,  88,  92,  93. 
Minutes,  196-203,  311-317. 
Forms,  311-317. 
Amendment  of,  126,  127,  202. 
Approval  of,  126,  127,  141,  168,  201,  202. 
Book  of,  195-198,  311. 
Committee,  174,  198. 
Correction  of,  126,  127,  202. 
"Cut  and  Dried,"  202,  203. 
Directors',  168,  197-202. 
First,  264-266. 

Forms,  264-266. 
Regular,  168,  201,  314. 

Forms,  314,  315,  316. 
Special,  168-201. 

Forms,  316,  317. 
Outline,  120,  305,  306. 
Forms,  305,  306. 


GENERAI,  INDEX.  411 

[References  are  to  pages.] 

Minutes — Con  tinued. 

Protest  on,  160,  199,  200. 

Reading,  126,  127,  168,  201,  202. 

Record  of,  41,  135,  197-200,  202,  245,  293-296. 

Signing,  134,  135,  140,  200. 

Stockholders',  168,  197-203. 

Annual,  126,  128,  201,  311,  312. 

Forms,  311,  312. 
First,  260-264. 

Forms,  262,  263. 
Special,  141,  201. 

Forms,  312-314. 
Subject  Matter,  128,  198,  199,  263,  264. 
Transcript  of,  356-358. 
Forms,  356-358. 
Mortgage.     (See  Deed  of  Trust.) 
Motions,  31,  199,  200,  293-295.     (See  also  Resolutions.) 
Forms,  294,  295. 

N 

Notes,  Corporate,  348-351. 

Forms,  348-351. 
Notice  of  Adjourned  Meetings,  134,  142. 

of  Directors'  Meetings,  162-167,  170,  267,  275,  276,  281,  382. 
Forms,  281. 
Failure  of,  162,  163,  165. 
of  Dividend,  60,  208,  327-330. 

Forms,  327-330. 
of  Election  as  Director,  331. 

Forms,  331. 
of  Election  as  Manager,  332. 

Forms,  332. 
of  Sale  of  Pledged  Stock,  74,  75. 
of  Stock  Assessment,  324-326. 

Forms,  324-326. 
of  Stockholders'  Meetings,  38,  60,  95,  97,  98,  117-119,  125,  126,  136- 
142,  267,  269-272,  276-280. 
Forms,  276-280. 
Failure  of,  117,  118. 
Proof  of,  118,  119,  125,  126,  140,  141,  166,  167,  352,  353. 

Forms,  352,  353. 
Waiver  of,  136,  138,  140,  163,  165,  274,  275. 
Forms,  274,  275. 
Number  of  Directors,  23,  144,  145. 
Change  of,  26,  144,  145. 


412  GENERAL  INDEX. 

[References  are  to  pages.] 


Oath  of  Inspectors  of  Election,  307,  308. 

Officers,  23,  175-194.     (See  also  President,  Treasurer,  Secretary,  etc.) 

Acceptance  by  Officers-elect,  170. 

De  Facto  and  De  Jure,  152,  176,  180,  181. 

Directors  as,  157,  175. 

Election  of,  23,  29,  156,  169,  170,  175,  176. 
Forms,  300. 

Executive,  183. 

Holding  over,  170,  176. 

Holding  Two  or  More  Offices,  176. 

Liabilities,  30,  38-40,  85,  179,  180,  188,  210,  217. 

of  Committees,  173,  185. 

of  Meetings,  120,  121,  166,  170. 

Powers  and  Duties,  77,  78,  102,  177-179,  183-185. 

Qualifications,  89,  177,  185,  188,  189. 

Removal,  156,  181,  182. 
Forms,  302. 

Reports,  168,  169,  184,  186,  190,  198,  199,  318-323. 
Forms,  294,  319-323. 

Resignations,  182,  333-336. 
Forms,  335,  336. 

Salaries,  148,  157,  177,  193. 

Signatures.     (See  Signatures.) 

Sources  of  Authority,  178,  179. 

Term  of  Office,  176. 

Ultra  Vires  Acts,  32,  179,  180. 

Vacancies,  170,  176. 
Order  of  Business,  119,  133,  167. 
Organization  of  Corporation,  20-23. 

Defective,  112,  113. 

First  Meetings  for.     (See  Meetings.) 
Original  Issue  of  Stock,  51,  54.  . 
Outstanding  Stock,  44,  47. 
Owners  of  Record,  52,  53,  56,  57,  61-65,  80,  95,  146,  147,  209,  239. 


Paid  up  Stock.     (See  Full-paid  Stock.) 
Par,  Issue  of  Stock  for  Less  than,  44,  45,  109,  110. 
Par  Value  of  Shares,  43. 

Partly  Paid  Stock,  23,  44,  45,  47-51,  62,  75,  78-82,  107-112,  130,  224,  226, 
228,  231. 
Transfer  of.  78-82. 


GENERAL  INDEX.  413 

[References  are  to  pages.] 

Partnerships,  19,  23,  24,  28. 

as  Stockholders,  81,  90,  91,  97. 
Patent,  Assignment  of,  367,  368. 

Forms,  368. 
Payment  for  Stock  in  Property.  (See  Exchange  of  Stock  for  Property.) 
Payment  of  Dividends,  206,  208-210.     (See  also  Dividends.) 
Forms,  327-330,  345,  347. 
of  Subscriptions,  107-110,  224,  229. 
Forms,  224,  225,  227-229,  324. 
Penalties  for  Failure  to  Keep  Books,  57. 
for  Infraction  of  By-laws,  40,  41. 
for  Official  Misconduct,  101,  180. 
Pledges  of  Stock,  72-75,  82,  85,  88,  209,  210. 

Powers  of  Attorney,  78,  81,  83,  84,  91,  92,  123,  240,  360-364.     (See  also 
Proxies.) 

Forms,  240,  360-364. 
Powers  of  Corporation,  21,  28-30, 

of  Directors.     (See  Directors,  Powers  of.) 
of  Officers,  177-179.     (See  also  President,  Secretary,  etc.) 
of  Standing  Committees,  171,  172. 

of  Stockholders,  22,  29,  32-38,  102-106,  145,  153,  156,  157,  175,  213. 
Preferred  Stock,  45,  46,  236-239. 
Forms,  237,  238. 
Dividend  Rights,  45,  46,  98. 

Liabilities  of,  112.     (See  also  Liabilities  of  Stockholders.) 
Participation  in  Assets,  46,  99. 
Participation  in  Increased  Stock,  98,  99. 

Rights  of  Holders  of,  45,  46,  95.     (See  also  Rights  of  Stockholders.) 
Voting  Rights,  46,  96.     (See  also  Voting.) 
President,  183-185.     (See  also  Officers.) 

Duties,  120,  121.  166,  168,  169,  183-185. 
Powers,  184,  185. 
Qualifications,  177,  185. 
Report,  184,  318-320. 

Forms,  294,  319. 
Resignation,  182,  335,  336. 

Forms,  335. 
Vice-,  185. 
Procedure  at  Meetings  of  Directors,  166-170,  261. 

at  Meetings  of  Stockholders,  121-133,  140-141,  149,  150,  250,  253,  261. 
for  Exchange  of  Property  for  Stock,  250-256. 
Forms,  251-256. 
Promissory  Notes,  348-351. 
Forms,  348-351. 


414  GENERAL  INDEX. 

[References  are  to  pages.] 

Proof  of  Notice  of  Meetings,  118,  119,  125,  126,  140,  141,  166,  167,  352,  353. 

Forms,  352,  353. 
Property  for  Stock.     (See  Exchange  of  Property  for  Stock.) 
Power  to  Buy,  Hold  and  Sell,  28,  29.    . 
Sale  of  Entire,  104,  105,  154,  213,  214. 
Forms,  296,  303. 
Protest  in  Minutes,  Directors,  160,  199,  200. 
Proxies,  95,  97,  122-124,  167,  259,  260,  282-292. 
Forms,  259,  260,  284-292. 
Directors  Cannot  Give,  167,  284. 
Revocation  of,  282,  283,  286,  292. 

Forms,  292. 
Signature  to,  283,  290. 
Voting  by,  73,  97,  123,  124. 
Publication  Notice  of  Dividends,  208,  327-329. 
Forms,  327-329. 
of  Meetings,  118,  119,  126,  277,  279,  280,  281,  353. 
Forms,  277,  279,  280,  281,  353. 
PuBuc  UtiIvITies  Corporations,  20,  21,  25. 

Qualifications  of  Directors,  89,  145-147. 

of  Officers,  177,  185,  188,  189. 
Quorum  at  Committee  Meetings,  174. 

at  Directors'  Meetings,  151,  166-168. 

at  Stockholders'  Meetings,  37,  122-125. 
Common  Law,  124,  125. 


Ratification  of  Unauthorized  or  Irregular  Action,  144,  165,  179,  180. 

Forms,  302. 
Reading  of  Minutes,  126,  127,  128,  168,  201,  202. 
Receipts  and  Drafts,  344,  347,  348. 

Forms,  344,  347. 
Receipts  for  Certificates  of  Stock,  54,  64,  84,  236,  240. 
Forms,  240. 
for  Dividends,  209,  347,  348. 

Forms,   347. 
for  Subscriptions,  50,  54,  203,  224-230. 
Forms,  225,  227-230. 
Assignment  of,  231,  232. 
Forms,  231,  232. 
Record,  Stockholders  of,  52,  53,  56,  57,  61-65,  80,  95,  146,  147,  208,  209,  239. 


GKNERAI,  INDEX.  415 

[References  are  to  pages.] 

Recording  By-laws,  41,  197,  245. 

Certificate  of  Incorporation,  197. 
Minutes,  135,  197-200,  245,  293-296. 
Motions,  199,  200,  293-295. 
Resolutions,  199,  200. 

Transfers  of  Stock,  52,  53,  57-59,  61-68,  80. 
Records.     (See  Books,  also  Minutes.) 
Registered  Bond,  385,  386. 
Registrar  of  Stock,  68-70. 

Regular  Meetings,  116-135,  149,  161-170.     (See  also  Meetings.) 
Reissue  of  Stock.     (See  Transfer  of  Stock.) 
Removal  of  Directors,  106,  153. 

of  Officers  and  Agents,  156,  181,  182. 
Forms,  302. 
Reorganization  of  Corporations,  215,  216. 
Repeal  of  By-Laws,  32,  36-38,  41,  103,  104. 

Reports,  127,  128,  168,  169,  184,  186,  190,  198,  199.     (See  also  Annual  Re- 
ports.) 

Forms,  294,  307-309,  319-323. 
Committee,  127,  128,  168,  169,  198,  318,  322,  323. 

Forms,  322,  323. 
Disposition  of,  127,  128,  168,  169,  198,  199. 
Inspectors',   128. 

Forms,  307-309. 
Officers',  168,  169,  184,  186,  190,  198,  199,  318-323. 

Forms,  294,  319-323. 
Tax,  318. 
Resignations,  152,  153,  182,  333-336. 
Forms,  333-336. 
Acceptance,  152,  153,  182. 
How  Addressed,  182. 
Peremptory,  152,  153. 
Right  to  Withdraw,  153. 
Tentative,  152,  153. 
Resolutions,  31,  137,  199,  200,  206,  210,  293,  296-303.    (See  also  Motions.) 
Forms,  296-303. 
Certified,  354,  355. 

Forms,  354,  355. 
Restrictions  on  Transfer  of  Stock,  75,  76. 

on  Voting  Right,  130,  131. 
Revocation  of  Proxy,  282,  283,  286,  292. 
Forms,  292. 
of  Subscription,  48,  49,  218-222. 
of  Powers  of  Attorney,  363,  364. 
Forms,  363,  364. 


416  GENERAL  INDEX. 

[References  are  to  pages.] 

Rights  of  Stockholders,  45,  46,  94-102. 

Certificate  Not  Essential  to,  49-51,  70,  95,  97,  130. 

Enforcement  of  By-laws,  38-41. 

Holders  of  Preferred  Stock,  45,  46,  95. 

Membership,  41. 

Special  Charter  Rights,  96,  97,  101,  102. 

Statutory  Rights,  96,  97,  100-102,  123,  124. 

to  be  Notified  of  Meetings,  95,  97,  98,  117,  118,  138,  139,  276. 

"  be  Recorded  as  Stockholder,  52,  53,  95. 

"  Inspect  Corporate  Books,  57,  96,  99-101,  180,  186-188,  196. 

"  Object  to  Ultra  Vires  Acts,  30. 

"  Participate  in  Assets,  46,  96,  99. 

"  Participate  in  Dividends,  45,  46,  63,  74,  95,  96,  98,  206 

"  Stock  Certificate,  49,  50,  70,  95. 

"  Subscribe  for  Increased  Stock,  96,  98,  99. 

"  Transfer  Stock,  51,  75,  76-79,  95.     (See  also  Transfer  of  Stock.) 

"  Vote,  46,  73,  74,  95-98,  122-124,  130,  131. 

When  Stock  Certificate  is  Lost,  66,  70-72,  130. 
RoLi,  Call,  121-123. 

Forms,  304. 
Rules  Regulating  Transfers,  77-93. 

Summary  of,  91-93. 


Salaries.     (See  Compensation.) 
Sale,  Bill  of,  365. 

Forms,  365. 
of  Entire  Assets,  104,  105,  154,  213. 

Forms,  296,  303. 
of  Pledged  Stock,  74,  75. 
Scrip  Dividends,  207. 
Scrip,  Instalment,  50,  203,  226,  228,  231,  232. 

Forms,  227,  231,  232. 
Seal,  28,  187,  342. 

Attestation  of,  339. 
Forms,  340. 
Secretary,  185-188.     (See  also  Officers.) 
Affidavit  of,  126,  139,  352,  353,  357. 

Forms,  353,  357. 
Books  of,  52-60,  186-188,  195-198,  203. 
Certificate  of,  125,  126,  140,  197,  299,  352-557. 

Forms,  352-357. 
Duties  of,  185-188. 


GENERAL  INDEX.  417 

{References  are  to  pages.] 

Secretary — Continued. 

Duties — Continued. 

Affixing  Seal,  187,  339,  342. 

Call  of  Roll,  121-123. 

Closing  Transfer  Book,  53,  59,  60,  117,  119,  208. 

Correction  of  Minutes,  126,  127,  202. 

Custodian,  55,  187,  188,  196,  200. 

Issue  of  Stock,  54,  55,  256. 

List  of  Stockholders,  119-121,  140,  186,  208,  304,  305. 

Lost  Certificates,  66,  70-72,  V,  78,  93,  130. 

Minutes,  Reading  and  Recording,  120,  126,  127,  135,  168,  197- 

202,  293-296,  305,  306.     (See  also  Minutes.) 
Notice  of  Meetings.     (See  Notices.) 
Officer  of  Committees,  173. 
Officer  of  Meetings,  120,  121,  166,  170. 
Order  of  Business,  119,  133,  167. 
Preparation  for  Meetings,  119,  120,  186,  304-306. 
Proof  of  Due  Notice.     (See  Notices.) 
Proxies.     (See  Proxies.) 
Recording  By-laws,  41,  197,  245. 
Refusal  of  Transfers,  66,  67,  75,  77-79,  87. 
Reports,  128,  168,  169,  186,  198,  200. 
Transfer  of  Stock,  54,  55,  57-68,  77-79,  240. 
Qualifications  of,  188. 
Receipt,  240. 

Forms,  240. 
Signature,  135,  187,  200,  234,  260,  337. 
Surrender  of  Records,  188. 
Shares  of  Stock,  42,  43.     (See  also  Stock.) 
Signature,  Corporate  and  Official,  187,  191,  337-341,  348. 
Forms,  338-341. 
to  Assignment  of  Stock,  82,  83,  86,  90-93. 
"  Minutes,  134,  135,  140,  200. 
"  Notes,  348. 
"  Proxies,  283,  290. 
"  Stock  Certificate,  186,  187,  234,  236. 
Special  By-law  Provisions,  36,  37,  96,  101,  102. 
Charter  Provisions,  27,  37,  96,   101,   102. 
Charters,  22. 

Meetings.     (See  Meetings.) 
Standing  Committees,  156,  171-174.     (See  Committees,  Standing.) 
Statutory  Consolidation,  212,  213. 

Liabilities  of  Directors,  159,  160. 

of  Stockholders,  110-115. 
Rights  and  Powers  of  Stockholders,  96,  97,  100-106,  123,  124. 


418  GENERAI,  INDEX. 

[References  are  to   pages.] 

Stock,  20,  21,  23,  24,  42-93. 

Assessment  of,  45,  79,  80,  114,  115. 

Assignment  of,  61-93.     (See  also  Transfer  of  Stock.) 

Forms,  239,  240. 
Books,  52-60,  63,  67,  68,  369-376.     (See  also  Books.) 

Forms,  369-372,  374-376. 
Certificate  Book,  53-56,  58,  64,  68,  69,  130. 
as  Stock  Book,  55-57,  130. 
as  Transfer  Book,  58,  130. 
Certificates.     (See  Certificates  of.) 
Classification  of,  27,  45,  131. 
Common,  45,  236,  237. 

Forms,  235. 
Corporation  Holding,  88-90,  97,  130,  146,  214,  218. 
Directors  Holding,  145-147. 
Dividends  on.     (See  Dividends.) 
Exchange  of  Property  for,  109,  250-256,  261. 

Forms,  251-256,  258-260,  263,  265. 
Forfeiture  of,  108,  115. 

Forms,  326. 
Full-paid,  23,  44,  45,  48-51,  61,  62,  75,  79-82,  107-112,  114,  115. 
Guaranteed,  46. 

Increase  and  Decrease  of,  26,  96,  98,  99. 
Issue  of,  47,  49-52,  54,  55,  186,  256. 
Issued,  44,  47. 
Ledger,  56,  57,  66,  67,  371-376. 

Forms,  372,  374,  375. 
Liabilities.     (See   Liabilities   of   Stockholders.) 
Original  Issue,  51,  54. 
Outstanding,  44,  47. 

Par,  Issue  of  for  Less  than,  44,  45.  109,  110. 

Partly  Paid,  23,  44,  45,  47-51,  62,  75,  78-82,  107-112,  130,  224,  226,  231. 
Pledged,  72-75,  82,  85,  88,  209,  210. 
Preferred,  45,  46,  95,  112,  236-239. 

Forms,  237,  238. 
Shares  of,  42,  43. 

Subscribers  to.     (See  Subscribers.) 
Subscriptions  to.     (See  Subscriptions.) 
Transfer  of,  61-93.     (See  also  Transfer  of  Stock.) 
Treasury,  44,  46,  47,  67,  68,  130. 
Unissued,  43,  44. 
Voting  Rights.     (See  Voting.) 
Watered,  47. 
Stock  Corporations,  19-21. 
Stock  Dividends,  207. 


GENERAL  INDEX.  419 

[References  are  to  pages.] 

Stockholders,  20,  21,  43,  48-51,  94-115. 

Certificate  Not  Essential,  49-51,  70,  95,  97,  130. 

Corporations  as,  88-90,  97,  130,  146,  214,  218. 

Directors  as,   145-147. 

Dummy,  81,  82. 

Expulsion  of,  41. 

Liabilities  of,  23,  44,  45,  49,  79-85,  107-115.     (See  also  Liabilities  of.) 

List  of,  119-121,  140,  186,  198.  304,  305. 

Forms,  304. 
Married  Women  as,  80,  82,  83,  92. 
Meetings  of.     (See  Meetings;  also  Minutes.) 
Minority,  31,  32,   131-133,  216. 
Minors  as,  80,  87,  88,  92,  93. 
Not  of  Record,  63-65,  80. 

of  Record,  52,  53.  56,  57,  61-65.  80,  95,  146.  147,  208,  209,  239. 
Powers,  102-106.     (See  also   Powers.) 
Right  to  Certificate,  49,  50,  70,  95. 
Rights,  45,  46,  94-102.     (See  also  Rights.) 
Subscribers  are,  48,  50. 
Stub,  Stock  Certificate.  54,  55,  64,  236-238. 

Forms,  235,  236. 
Instalment  Scrip  or  Certificate,  226,  228. 

Forms,  227. 
SxJBSCRiBERS,  are  Stockholders,  48,  50. 
Liabilities  of,  23,  48,  107-110. 

to  Stock,  47-50,  94,  95,  218-224,  226,  228,  229,  231,  232.     (See  also 
Stockholders.) 
Subscriptions,  32,  47-50.  94.  95,  107-110,  218-232. 
Acceptance  of.  48-50,  94-95. 
Agreement,  47-49,  218-224. 

Forms,  219-224. 
Assignment  of,  231,  232. 

Forms,  231,  232. 
Book  of,  203,  219. 
Delinquent,  107-110,  325,  326. 

Forms,  326. 
Incorporators',  94,  250,  251.  252.  266. 

Forms,  251,  252. 
Instalment  Book,  203,  204,  377. 

Forms,  376. 
Instalment  Certificate  Book,  203,  226,  228. 

Forms.  227-229. 
Lists,  47-49.  218-224. 

Forms.  219-224. 


420  GENERAL  INDEX. 

[References  are   to   pages.] 

Subscriptions — Continued. 

Payment,  107-110,  223-229. 

Forms,  224,  225,  227-229,  324. 
Receipts  for,  50,  54,  203,  224-230. 

Forms,  225,  227-230. 
Revocation  of,  48,  49,  218-222. 


Temporary  Certificates  and  Receipts  for   Subscriptions,  50,  54,  203, 
224-230. 

Forms,  225,  227-230. 
Tenants  in  Common,  Transfers  to  and  by,  81,  91. 
Term  of  Office,  149-152,  176. 
Testimonium  Clauses,  339-341. 

Forms,  339-341. 
Transcript  from  By-laws,  356. 
Forms,  356. 
from  Minutes,  356-358. 
Forms,  356-358. 
Transfer  Book,  53,  57-60,  66,  67,  117,  130,  208,  369-371. 

Forms,  369-371. 
Transfer  of  Stock,  24,  50-55,  57-59,  61-93,  231,  232,  239,  240. 
Forms,  239,  240. 
Assignment  of  Certificate.     (See  Certificates  of  Stock.) 
By  Attorney,  58,  59,  62,  63,  78. 
Duties  of  Officers  as  to,  54,  55,  58-68,  77-79,  240. 
Forged,  11,  78. 
Form  of,  82,  83. 
Fraudulent,  84,  85. 
Full-Paid  Stock,  51,  61-68,  75. 
In  Person,  58,  59,  78. 

Liability  Involved,  Corporation,  55,  11,  81,  84,  86,  87. 
Officers,  85. 

Stockholders,  79-82,  87,  110-112. 
Lost  Certificates.  66,  70-73,  11,  78,  93. 
On  Books,  52,  53,  57-59,  61-70. 
Partial,  64,  65. 

Partly  Paid  Stock,  50,  51,  62,  75,  78-82,  231,  232. 
Pledged  Stock,  72-75,  82,  85. 
Precautions  in,  55,  11,  78,  82,  86,  90,  92,  93. 
Procedure,  61-68.  • 

Refusal  of  by  Corporation,  66,  67,  75,  77-79,  87. 
Restrictions  on,  75,  76. 
Rules  Regulating,   Summary  of,  91-93. 


GENERAL  INDEX.  421 

[References   are   to   pages.] 

Transfer  of  Stock — Continued. 

Signature  to  Assignment,  82,  83,  86,  90-93. 
To  and  by  Agents  and  Attorneys,  78,  81-84,  92,  93. 
"      "     "   Corporations,  81,  88-90,  93. 
"      "     "   Executors  and  Administrators,  81,  84-86,  92,  93. 
"      "     "   Guardians,  81-83,  87,  88,  92. 
"      "     "    Married  Women,  80,  82,  83,  92. 
"      "     "    Minors,  80,  87,  88,  91-93. 
"      "     "    Partnerships,  81,  90,  91. 
"      "     "   Tenants  in  Common,  81,  91. 
"      "     "   Treasurer,  81,  90. 
"      "     "   Trustees,  81-83,  86,  87,  90,  92,  93. 
To  Dummy  Stockholder,  81,  82. 
"    Whom  Stock  may  be  Transferred,  79. 
Transfer  Agent  and  Registrar,  68-70. 
Treasury  Stock,  67,  68. 
Unpaid  Subscriptions,  51,  62,  75-82,  231,  232. 
Unrecorded,  63-65,  80. 
Who  May  Transfer,  78,  79. 
Without  Certificate,  51,  53. 
Transferee  of  Stock,  79-85,  110-112. 
Transferrer  of  Stock,  79-85,  87,  110,  111. 
Treasurer,  188-191.     (See  also  Officers.) 
Affidavit,  358,  359. 

Forms,  358,  359. 
Bond  of,  190,  191,  378,  379. 

Forms,  378,  379. 
Books,  189-191,  195,  203,  204. 
Duties,  189-191. 
Qualifications,  189. 
Receipts.  226. 

Forms,  227-230. 
Report,  190,  318,  320-322. 

Forms,  320-322. 
Resignation,  336. 
Forms,  336. 
Signature,  234,  236,  337. 
Surrender  of  Records,  190,  191. 
Transfers  to  and  by,  81,  90. 
Treasury  Stock,  44,  46,  47,  130. 

Transfer  of,  67,  68. 
Trust,  Deeds  of.  388-396. 

Forms,  388-396. 


422  GENERAL  INDEX. 

[References   are   to  pages.] 

Trustees.     (See  also  Directors.) 

Before   Incorporation,  220,  226. 
Receipts,  226. 

Forms,  225. 
Transfers  to  and  by,  81,  86,  87,  90,  93. 
Voting  by,  97. 

V 

Ultra  Vires  Acts,  30,  32,  179,  180. 

Unissued  Stock,  43,  44. 

Unpaid  Stock.     (See  Partly  Paid  Stock.) 

Usage,  Official  Authorization  by,  178,  179,  185. 

V 

Vacancies,  Among  Directors,  104,  150,  151. 
among  Officers,  170,  176. 
in  Committees,  173. 
Vice-President,  185.     (See  also  President.) 
Violation  of  By-laws,  38-41. 
Voting,  128-133,  167,  168. 

by  Ballot,  97,  128,  129,  169,  309,  310. 
Forms,  310. 
"    Corporation,  89,  97,   130,  289-291. 
"    Directors,  167,  168. 
"    Executors  and  Administrators,  97. 
"    Joint  Owners,  91,  97. 
"     Partnerships,  91,  97. 
"     Receivers,  97. 
"    Single  Ballot,  97,  129,  169. 

Forms,  294. 
"    Trustees,  97. 
Common  Law  Rights,  96. 
Cumulative,  32,  131-133. 
Pledged  Stock,  72,  75. 
Preferred  Stock,  46,  96. 
Proxies,  73,  95,  97,  123,  124,  167,  259-261,  282-292. 

Forms,  259,  260,  284-292. 
Rights,  46,  73,  74,  95-98,  122-124,  130,  131. 

Restriction  of,  130,  131. 
Stock  Books  Control,  97,  120. 
Voting  Trust,  76. 

W 
Waiver  of  Notice,  136,  138,  140,  163.  165,  274,  275.     (Se"e  also  Calls  and 
Waivers.) 

Forms,  274,  275. 
Watered  Stock,  47. 


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